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Tax-free savings 'could balance out poor interest rates'

Published: 02/02/2010

Tax-free savings could prove vital for those relying on interest from their savings to top up their income.

This is according to a study by Andrew Hagger of Moneynet.co.uk.

Mr Hagger found that with lower rates of interest on savings accounts, many people could end up benefitting from falling under the tax-free threshold.

He said: "Savings income is a vital lifeline for some people, so qualifying for interest free of tax will at least go some way to offsetting the sharp fall in interest rates."

Mr Hagger also commented on figures from ING Direct which show that the average Briton only has £2,205 in "readily accessible cash and deposits".

Urging banks to make saving a more appealing option, he said: "Six months down the line if not years later, we will get a much better rate on that money you put away now. So people should always look to save when they can afford to."

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