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Research: Older people using savings accounts for grandchildren

New research has shown that many older people in the UK are putting money in savings accounts such as ISAs or fixed bonds for their grandchildren.According to a study conducted by the Cheltenham & Glo...

New research has shown that many older people in the UK are putting money in savings accounts such as ISAs or fixed bonds for their grandchildren.

According to a study conducted by the Cheltenham & Gloucester building society, these so-called "silver savers" store away an average of 1,000 every year for their young relations in order to provide them with a nest egg of savings at some point during their lives.

The financier found that 33 per cent of grandparents are saving for their grandchildren, with 27 per cent starting to do so as soon as the child is born.

45 per cent of those who do save indicated their wish for this money to be used to meet educational costs, such as university fees.

Mark Bower, managing director of Money Maxim, said recently that financial pressure on families is likely to continue growing in 2011 following the recession.

Meanwhile, one lender has added to its range of fixed bonds products.

Consumers wishing to compare savings on the most competitive fixed bonds packages available in the UK may like to consider a new product being launched by one financier.

In news which may be of note to those who already have Yorkshire Building Society fixed rate bonds, the lender announced earlier this week (January 26th 2011) that it is to add to its range of such accounts with a three-year package that has an annual equivalent rate of 4.15 per cent.

Additionally, the interest on the deal can be taken monthly should the individual wish, meaning that the package gives increased levels of flexibility to customers.

Mike Helliwell, savings product manager at Yorkshire Building Society, commented: "This bond offers a competitive rate that will give new and existing customers an excellent return on their investment."

This comes after Leeds Building Society announced it has created a new 18-month fixed bonds package with a rate of 3.15 per cent.

Pressure on families is not going to decrease soon, an expert has said.

Increased levels of pressure on personal finance options such as current accounts and credit cards will not improve significantly in the near future due to several factors, an expert has said.

According to Mark Bower, managing director of online resource Money Maxim, issues such as the rise in VAT from 17.5 per cent to 20 per cent - which was confirmed on January 4th 2011 - and the ongoing effects of the government's spending cuts will serve to impact on the financial wellbeing of families up and down the country.

Since coming to power following the general election in May last year, the Conservative-Liberal Democrat alliance has pledged to knock billions of pounds off the UK's public spending bill as the nation attempts to recover following the global economic downturn.

This may mean that consumers should consider trying to put more of their income into savings accounts in order to provide some security for their future, but Mr Bower suggested that this may prove difficult because the tightening of credit has put additional pressure on household expenditure.

"As food, utility and other household bills have recently increased month-on-month those without a savings base have found themselves living from day to day and even less able to save for larger bills or purchases even in the short term," he explained.

The expert was speaking after research by the Co-operative and Shelter published earlier this week (January 25th 2011) showed that nearly 28 per cent of Brits are having to spend more money each month than they have coming in.

Mr Bower added: "In the past they probably relied on credit, but with that both more expensive and in shorter supply, that has made smoothing the annual budget across the year more challenging."

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