Moneyfacts.co.uk expert says savings accounts fund lending

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Moneyfacts.co.uk expert says savings accounts fund lending

Banks need consumers to put money into savings accounts, as it gives them the liquidity to lend, according to an expert from Moneyfacts.co.uk.

Darren Cook, head of press and PR at the company, suggested that banks are even having to pay a "premium" to savers to encourage them to deposit cash.

The Moneyfacts.co.uk representative noted that his allows financial institutions to have sufficient liquidity to lend money to consumers.

He explained that part of the reason the base rate is so low currently is to try to get people to go out and spend their money.

Mr Cook said: "Low interest rates are generally not encouraging people to save, but to actually plough their money back into the economy to get it going."

This month, Moneyfacts.co.uk reported that a basic rate taxpayer needs to find an account that pays at least 3.88 per cent currently if they want to maintain the purchasing power of their capital.

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