Savers may have the best of intentions when it comes to putting money aside, but that doesn't always mean that they like diving into the world of finance to try and secure the best deal. Financial jargon can be especially off-putting, with savers finding it easier to learn a new language than explain certain finance terms.
This is according to new research from Hampshire Trust Bank, which reveals that on average, people find it easier to learn a new language, explain the offside rule or change a tyre than to understand what their credit rating means. Harder than this, say survey participants, is cooking a roast dinner, with explaining interest rates considered the hardest thing to do.
"While interest rates are the hot topic in the savings market, they are not always the easiest to understand," Stuart Hulme, director of Savings and Marketing at Hampshire Trust Bank, said. "Clearly, more needs to be done to help people understand how changes to an interest rate can impact the return on savings, after all this is vital in order to ensure you are getting a good return on your money. It shouldn't be harder to understand than the offside rule, which is notoriously complicated."
It doesn't help that there are multiple types of interest rates. Many don't understand the difference between the gross rate and AER, and the existence of Sharia'a compliant savings accounts only makes it harder to explain what an interest rate is. If you set these distinctions aside, however, interest rates can most easily be explained as the percentage of extra money that you get on top of your savings after a certain period of time has passed. So, a savings rate of 1% on a pot of £100 will get you £1 extra – or £101 in your savings pot – once the specified period (usually a year) ends.
Worryingly, the confusion surrounding savings accounts could be taking its toll, as 33% of people said they were most likely think about changing their savings account in the middle of the night. Clearly, not knowing if your current savings account is offering you the best deal is enough to keep some people up at night.
Not all people are this worried, however, as 31% predominantly think about changing providers while watching TV, followed by 12% who think about it in the bath, 9% who consider it during their commute and another 9% who do so while walking the dog. An interesting 4% even said they're most likely to think about switching savings providers during a date.
Moving your savings pot to a more lucrative account can be a hassle, as you'll have to think about when you will get access to the savings (with fixed accounts) and may have to move the funds into your current account first. The hassle could be worth it, though, especially if rates were lower when you got your previous account or a bonus rate has since expired.
It's also worth being able to make the most of your retirement savings, which 70% said they're saving for, while 38% said they were saving for their holidays. Having just as worthy a goal are the 33% who are saving just for a rainy day and the 28% who are doing so to help their children or other dependents. There are all sorts of great reasons to save, which is exactly why you should take the time to shop around and make sure you are making the most of your money.
Our savings guides can help you make sense of financial jargon
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Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.