Sunday, January 4, 2009

I think it’s called “winging it”.

Savers to be given Government help to protect against interest rates cuts

The Bank of England is poised to drop interest rates, already just 2 per cent, to the lowest level in its 315-year history later this week at the next meeting of the Monetary Policy Committee (MPC). It will leave millions of savers with accounts which already pay interest of 1 per cent or less facing zero per cent interest. For the first time Mr Brown admitted savers would need to be helped. He said: "We are looking at means by which we can help pensioners and others with their savings and that is one of the things that we'll look at in the run up to the Budget and I'm very conscious that people have saved money all their lives, need the best deal that is possible."

Posted by flintster1994 @ 11:00 PM (1542 views)
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18 thoughts on “I think it’s called “winging it”.

  • it_is_going_with_a_bang says:

    I would imagine only because he has realized he will now be taxing nothing which means no revenue from savings.
    Unless he is implying that he wont tax savings which is unlikely.
    He could start by not taxing my f&*&^* pension fund for starters.

    Brown wants a system that involves no interest rates for borrowers but good interest rates for savers – this is a rabbit out of a hat I really must see.

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  • japanese uncle says:

    Incidentally little-known (at least to me) bank called Close Brothers Ltd. is offering two-year fixed savings bond at 5% gross. Any info re this firm must be of great interest to the savers in general, and thus will be appreciated. Is is a marginal institution or ‘chancer’?, though this bank is confirmed to be ‘authorised’ for the purpose of Financial Compensation Scheme under the FSA.

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  • tyrellcorporation says:

    JU probably worth checking out this latest offer from Tesco. Much as I dislike Tesco their current internet account is apparently offering 6%. At 4.8% net this is about 2% more than I’m getting on my crappy ISAs. I’m looking at IRs across the board tonight and will blitz my finances this week to try and contain the IR losses.

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  • tyrellcorporation says:

    Close Bros, never heard of ’em! Wouldn’t feel too comfy with my cash in their safe.

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  • I have heard of Close Brothers many times, they are a big name. Couldn’t tell you anty more than that.

    ‘Brown wants a system that involves no interest rates for borrowers but good interest rates for savers – this is a rabbit out of a hat I really must see.’ – Yes, me too!!!!!!!

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  • Well, I wouldn’t mind being bribed by the government – still won’t be voting for them though. Rabbit out of a hat sounds about right.

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    ( O )
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  • At tyrellcorporation…. Tesco offer has been dropped am afraid. Tried to apply last night for this internet account and it simply came up as ‘closed’ when I got past the initial questions. Moneysavingexpert also has this one as ‘dropped’. Unless you know something different which would be of HUGE interest to me because I am desperate to move a decent pot of savings.

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  • I note here some possible catches with Tesco’s offer.

    See:
    Tesco’s ‘flyer’, referenced in their terms & conditions: “We will work out interest daily on the cleared credit balance. Interest will be paid into your Account as specified in the interest rate flyer. Interest rates will change from time to time. You can get details of your current interest rates by using the Online Service for Internet Saver customers and additionally our Telephone Service for Instant Access Savings customers. When we change our interest rates we will notify you personally within thirty days of the change.”

    Flyer states:
    “””
    Interest on our Internet Saver account is paid annually in March.
    All balances
    Gross 6.00%
    AER 6.00%
    Net 4.80%
    Rates correct as at 27th November 2008
    “””

    So you may* get the 1.5% bonus on top of their current rate, which may not be 4.5% now – a rate that existed less than one month after the BoE cut from 4.5% to 3% and before the cut from 3% to 2% (and before the upcoming cut too).
    * If you’ve applied in full by the 7th Jan (now, somewhat unlikely if there is paperwork to be delivered to you to fill out)

    Furthermore their ‘flyer’ states:
    “””
    In light of the recent Bank of England base rate decrease, we have reviewed the interest rates that apply on our savings accounts. From 8th January 2009 our interest rates for existing customers will be reducing by 0.90% gross p.a./AER.
    “””
    …and for new customers? Who knows:
    “””
    When we change our interest rates we will notify you personally within thirty days of the change.
    “””
    They may well already have changed it.

    I think they are grabbing as many deposits as possible whilst they can, as is reinforced by this little number, again from their flyer:
    “””
    Tesco Internet Saver Account rates are subject to change. Interest is calculated on a daily basis and is paid annually. Interest will be paid the last business day in March.
    “””
    So when April comes along and there are no competitive accounts left you’ll leave your money where it is for another year (You’ll get 9 months more of the bonus as a sweetener, but you’ll be locked in for the accrual period all the same)

    Basically it sounds like it could be cheaper for Tesco than borrowing from elsewhere.

    Of course you have the FSA caveat that you may complain to the Financial ombudsman once you’ve had a dialogue with Tesco Finance (or after 8 weeks since contact), but…

    I ain’t buying in.

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  • Typical GB, sounds like he’s very belatedly realised that he’s stuffed things up for getting any votes from the savers.

    BTW, this article has one of the best quotes ever re GB and his mismanagement of the economy and subsequent claims to have rescued it!

    Michael Fallon, a senior Conservative member of the Treasury Select Committee, said: “It is absurd. It’s like an arsonist pretending that he invented the smoke alarm. It was his supervisory system that allowed the consumer spend and boom.”
    Am thinking about writing to this guy, he has certainly hit the nail on the head.

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  • Forgot my password first time so a similar comment from me will probably appear later (sorry to be repetitive!!). Basically, tesco’s offer is now dropped I believe. I have checked moneysavingexpert.com and have also tried to apply last night on Tesco’s website and it simply advised me that the application process was ‘closed for now’ (or words to that effect). Maybe not such a bad thing having just read 51ck’s post.

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  • Well GB better come up with something a bit quickly for us savers, truth is I expect this is more hot air attempting to appease everyone.

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  • Cakeandeatit says:

    He wants his cake and to eat it too!

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  • japanese uncle says:

    51ck-6-51x

    Great analysis! Well done!

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  • voiceofreason says:

    At Triodos (an ethical bank -is that an oxymoron ?), you get a free book (‘Go Slow England’ book by Alastair Sawday) worth £20 if you invest £100 here .

    2% IR is cr*p though.

    I applied for the Tesco account before Xmas. It is instant access, so if they lower the IR I will instantly move it elsewhere 🙂

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  • japanese uncle says:

    Close Brothers Ltd seems to be a subsidiary of a US bank. Again procedure to seek compensation in the event of their default could be a complicated matter, involving US scheme.

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  • Good analysis 51ck

    I was looking at that as an account (haven’t applied yet).

    Voice of Reason.

    If the interest is paid annually, I assume you leave a nominal £100 or so in to keep the account open (if they drop rates) and in a year you receive the interest for the period the bulk of your savings were in there?

    BTW Egg have just dropped there rates again.

    What annoys me is these banks seem to get away with back dating interest rate drops.

    There is no reason as far as I can see that notification of interest rate changes can’t be sent to savers within 48 hours of a Bank of England rate change.

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  • “If the interest is paid annually, I assume you leave a nominal £100 or so in to keep the account open (if they drop rates) and in a year you receive the interest for the period the bulk of your savings were in there?”

    Interesting – I’m not sure (IANAL)
    The terms (via the flyer) only specify that “Interest is calculated on a daily basis and is paid annually”. They say nothing specific about accrual and compounding sticking to vaguer concepts.
    By fair contract terms I’d suppose you would probably be covered in the event of a court battle (i.e. in the event that you withdraw all but enough to maintain the account expecting the previously ‘calculated’ interest to accrue at the end of March the next year and find it does not). You’d also probably need to get together with others in the same boat to make it worth your while though!
    I would suggest contacting them with a request for clearer terms or some further definition of existing terms if the offer were still on the table.

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  • “these banks seem to get away with back dating interest rate drops.”

    Yeah – typical bankers fiddle.
    Put a fee wherever you can, make things as opaque as possible.
    e.g.’s:
    We charge no commission on currency transactions over £x. (but the spread is huge anyway)
    It takes 3 – 5 days to clear your money. (whilst it sits in our own account)
    etc…
    oh and…
    Account admin fee (of course we need to administer your account – that’s our service, but we won’t mention the other ways we make money from your account)

    Of course competition between banks should force these fees towards their minima, however the U.K. population are less likely to vote with their feet than other markets.

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