LONDON, August 12, 2013 /PRNewswire/ --
Savers using typical high street cash ISAs are losing £54 per year according to p2p lender Zopa
A report from the Centre for Economics and Business Research (CEBR) report and UK's largest peer-to-peer lender has revealed that whilst UK households are saving more than ever, each household is £54 per year worse off.
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UK savers are continuing to invest their money into savings products that fail to beat inflation with shocking results, illustrated by the simple calculation below:
Savings per UK household have increased dramatically since the financial crisis with figures showing that from January - March 2009 £7.1 billion was saved compared with £18.5 billion in the same period this year. However, ISA providers don't appear to be advising people that they will lose money in those savings to inflation.
So how do you make money from your savings in 2013?
The report also examined alternative saving options to get UK savings working harder. With over half (55%) of UK savers worried that low interest rates are holding back the economy and nearly two thirds, (61%) believing the Government should be doing more to get smart savings and loans moving, one area the CEBR looked at was peer-to-peer lending. Put simply peer-to-peer lending, also known as P2P, is lending money to other people at an agreed rate of interest through an online platform such as Zopa, that credit checks borrowers on your behalf to provide better returns and bypassing the high street banks. The CEBR calculated that last year alone the average return achieved from P2P lending was a 3.4% positive return after inflation.
Independent financial analyst, Louise Cooper CFA says "Britons need to make their savings work as hard as they do, even more so when money is tight. Peer to peer lending offers a real alternative to banks: higher rates for savers and a responsible lending policy for borrowers. If you don't like bankers, why give them your savings?"
Worryingly, the report found that over a fifth (22%) of Britons actually have no savings at all and the median savings for all households under 45 years old (average) is just £1,500. This lack of savings points to a potential crisis in future as, households particularly those over under the age of 45, must begin to save more rapidly if they are to avoid a significant fall in living standards in old age.
Giles Andrews, CEO and Co-Founder of Zopa, the UK's largest peer-to-peer organisation said, "No matter how much money you save, you want to get the best return on your money. Whilst alternative ways to save like P2P lending are offering better rates to consumers, altering years of consumer financial behaviour, where banks are the go-to option will take some time to change. The CEBR findings demonstrate that this is not always the best solution and at present many households are losing out because banks are not providing competitive savings rates. Our advice would be shop around, take a look at alternative options like Zopa and be smart with your money to ensure you get the best deal."
About Zopa
Zopa is the UK's leading peer-to-peer lending company - bypassing banks and their high charges to put more back into the pockets of the UK's savers and borrowers. Zopa matches smart borrowers looking for lower-rate loans with savers looking for higher interest. Since Zopa was founded in 2005, it has arranged more than £350 million in peer-to-peer loans and has been voted 'Most Trusted Personal Loan Provider' in the Moneywise Customer Awards for the past four years. Zopa has over 41,000 active savers lending between £10 and £1 million and has a lower default rate on loans than the banks
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