Saving logically during a crisis

With increasing interest in savings bank deposits last time in some countries become more attractive from the early repayment of mortgages cheap, writes „Financial Times“. Carcase logically savings in times of crisis – people spend less and may decrease the costs is greater than the decline in income. Thus, in a moment it appears that they save a significant amount, which may be sufficient to prepay the remaining mortgage loan or other consumer. Which is more profitable but at the moment? In response to this question has many convention – mainly in which country you live.

„People who prefer deposits in the current situation will provide a greater return on their money“, commented the „Financial Times“ the situation in the UK by Adrian Loukok investment company Bestinvest.
„This argument is contrary to general perception that the savings should be used for prepayment of housing loans,“ he asserts. In principle, prepayment of mortgage loan reduces future interest costs is equivalent to the acquisition of the interest on it. Put money in bank deposits at the moment, however, brings greater returns.

Another argument in favor of bank deposits is the flexibility to provide for people whose job is threatened. This is particularly topical issue in Britain at present, given the economic uncertainty. „Everyone needs some money for a rainy day, but in this situation it is almost imperative for the crouching borrowing“, commented Ray Bolgar brokerage firm of John Charkal. In the UK is a logical and couples to have deposits in the name of the man with the lower tax status. Thus ensuring maximum yield.

In our interest on deposits also reached high levels – for the six year term deposit rate reached 12% in BGN, has proposed a 9.75 percent interest annually on deposits quarterly. So if you have any free agents and do not doubt that settled early part of the loan in order to reduce the principal, interest, time, and so the amount of contributions in the future, better make that account if the amount of input bank deposit, you will not receive a better return. I only received the interest you pay on the loan installments. Moreover, in Bulgaria in early repayment of the loan shall be charged penalty fees, which is about 5%. It would „eat“ part of „profit“ from the savings on the loan payments.

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Finance

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