How can this help those people who have been scrimping and saving, living economically whilst squirreling away their savings for years and years (whilst everybody else has been accumulating debt and living off credit)?! Their income has more than halved...
This is the flip side of the coin. People who are living off savings interest are certainly having a hard time of it. A few years ago this looked like a reasonable way to have your hard earned money with unpredictable stock markets and high interest rates but unfortunately the landscape has changed since then.
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If you consider the total interest received as disposable income, you're doing it wrongOriginally Posted by DaisyGirl
The art of living off interest from savings is to re-invest a minimum of the inflation portion of the interest received to keep your capital investment on par. The gap between interest received and the inflation rate tends to stay fairly stable at around the 2% mark.
At the end of the day interest rates are more driven by the inflation figure than heating up or cooling down the economy (although those sentiments tend to be warning signs of a change of direction).
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The South African Reserve Bank has cut the repo rate by 50 basis points to 5,5%, governor Gill Marcus said on Thursday.
The prime rate would now fall to nine percent.
full story from M&G here
Although the banks maintaining their 3.5% margin is starting to look like a pretty big slice of the pie at these rates...
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the problem with standard bank is the interest comes down but the admin fees still kill you.
That's the only way they can remain in business. Let's not forget that banks are also businesses, and I am not trying to defend them, but the money in their coffers does not belong to them. As clients we somehow always think that they are our friends, and will always be there to help us when we are financially strapped - big mistake. The bank's stock is money, they want to protect it just like any business wishing to protect their stock.
Victor - Knowledge is a blessing or a curse, your current circumstances make you decide!
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I would certainly agree with you here, because this is their prime way of survival, but the thing is, they should narrow down interests equally.
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