What’s safest way to save your cash?

Oct 6 2008 by Andrew Baldwin, Huddersfield Daily Examiner

At the weekend American politicians finally voted through President Bush’s massive spending plans to save the country’s economy from collapse.

Political and financial leaders in the United States vowed to act “as expeditiously as possible” to put the provisions of the economic rescue package into action, but there is still no estimate as to when the American public can expect to see any benefit from the Emergency Economic Stabilisation Act of 2008 which will cost taxpayers up to 700 billion dollars (£397bn). ANDREW BALDWIN looks at where people in Huddersfield should now stash their cash – and it’s certainly not under the bed

WHEN even the US president admits to panic in the air about the global financial system, anybody in charge of the household budget should be mapping out a survival plan.

But is anything safe?

In this crisis even the ‘experts’ are frequently wrong-footed. How many of them, for example, ever imagined that the mighty Halifax-Bank of Scotland (HBOS) would be forced into the arms of Lloyds TSB?

Kevin Mountford, head of savings at financial website moneysupermarket.com, says: “There is nervousness among consumers.

“They don’t believe what the Government is telling them that the situation is stable. They are fearful and looking for a flight to safety.”

Step forward Ireland as a safe haven.

Tens of thousands of savers are transferring their cash out of the UK to gain the unlimited deposit protection recently afforded them by the Irish government.

A Bank of Ireland spokeswoman said the bank was seeing a ‘very, very steady’ increase in people contacting its call centres.

Savers with Irish institutions were last week promised 100% protection for their savings. Numbers of people using moneysupermarket.com to click through to an Irish bank and open an account have soared by three times.

But you don’t even have to do that to take advantage of the deal.

Many are just strolling round the corner to the post office – whose accounts are run by the Bank of Ireland and covered by the Irish government’s guarantee.

A Post Office spokesman said: “Since last week, when the government first changed the amount that was protected, we have seen an increase in customers’ savings.”

Comparable guarantees are offered in Britain by the taxpayer-backed Northern Rock and National Savings and Investments, which also runs premium bonds.

NS&I said it had seen a surge in interest at its call centres in recent days, although the group said it was too early to say if this would translate into sales.

Savers are actually the big beneficiaries of the credit crunch so far – because banks and building societies are desperate for their cash.

But commentators speculate that consumers who are jittery in the current financial turmoil are prioritising the perceived safety of their funds over the potential returns they can get on them.

“You really can't compare the 1987 crash with the scale of the problem today,” says Colin Jackson at financial advisor Baronworth Financial Services.

“That was a brief global stock market plunge which soon righted itself. The current climate is so uncertain that you don't know who or what will disappear next.”