why open a 3 month fixed term deposit account paying 0.25% interest?

d63 · 7 May 2016 at 1:03AM

any thoughts as to why anyone would deliberately open a 3 month fixed term deposit account paying 0.25% interest?

UBL bank are offering just such an account (http://www.ubluk.com/pages/index/personal_fixed_term_deposits) and even a 1 month option at 0.1%

this seems to me somewhat odd to say the least, especially since they also offer an easy access account account paying a fairly respectable 1.25%

presumably there is a good reason why someone would find such an account attractive, else why would a bank go to the trouble of offering it in the first place. -- could some kind soul enlighten me please?

(P.S. i have only picked on UBL as example because it was the first one i noticed doing this -- there are several other banks/building societies/whatever with similar offerings -- danske bank for example has a 3 month one at 0.15% -- ouch! what IS going on here! )

Pincher · 7 May 2016 at 7:03AM

Another product that defies belief:

http://shop.chess.co.uk/Revelation-II-Chess-Computer-with-Ebony-Pieces-p/cb05087.htm

£2,615!

It doesn't even move the chess pieces, which any program on a tablet could do.

I suspect it's a front for the FSB (= old Russian KGB) . They don't really want any business to interfere with the spying.

Maybe these banks need to pretend to offer boring products, when the real business is to move money for arms deals.

Or horror, a perverse mirror to Pay Day Loan: PEPs (Politically Entangled Person) are being deprived of their bank accounts. What if this is the only account they can get? :eek:

Dan83 · 7 May 2016 at 9:38AM

I'd assume this kind of account would suit people with loads of money and have already filled all other interest paying accounts.

0.25% is still better then 0%.

bigadaj · 7 May 2016 at 9:40AM

d63 wrote: »

any thoughts as to why anyone would deliberately open a 3 month fixed term deposit account paying 0.25% interest?

UBL bank are offering just such an account (http://www.ubluk.com/pages/index/personal_fixed_term_deposits) and even a 1 month option at 0.1%

this seems to me somewhat odd to say the least, especially since they also offer an easy access account account paying a fairly respectable 1.25%

presumably there is a good reason why someone would find such an account attractive, else why would a bank go to the trouble of offering it in the first place. -- could some kind soul enlighten me please?

(P.S. i have only picked on UBL as example because it was the first one i noticed doing this -- there are several other banks/building societies/whatever with similar offerings -- danske bank for example has a 3 month one at 0.15% -- ouch! what IS going on here! )

It maybe that these are products based on base rates, so paying x amount in relation to boe base rate, libor, Ecb, fed etc.

Historically these rates would have looked very normal but now with extended periods of negligible rates they stand out, in relation to the loss leading current accounts offer by many of the large banks.

As pincher says there are many ridiculous products out there and some people buy them so just ignore these offers and move on.

bigadaj · 7 May 2016 at 9:49AM

Dan83 wrote: »

I'd assume this kind of account would suit people with loads of money and have already filled all other interest paying accounts.

0.25% is still better then 0%.

Yes but even the new ns&i rates are well above 0.25%, so a full government guarantee on up to £2 million.

Plus · 7 May 2016 at 2:01PM

A lot of banks have similar accounts. The rates are set by an algorithm from base rate, LIBOR, etc, which updates the web page automatically. They don't promote them, it's just another bit of their website. It just so happens you're looking at them on an unattractive day/month/decade.

This is pretty standard 'rest of the world' banking. Perhaps we're unusual in the UK with having a competitive savings market with branded savings 'products', rather than 'you just get market rate' (minus our big commission) that many local banks offer in other countries.

The other thing is they often have a wider scope than just personal accounts. For instance, you're a business that has a tax bill to pay in 6 months. You can put away £xxx,000 at 0.yy% for that time and get it back at the end of the term. These are straightforward money market rates. You don't have access to personal Smart Bonus Saver Issue 42 accounts that individuals do, and the business can't play the current account game.

In this case UBL has a business banking version of the same:
http://www.ubluk.com/pages/index/business_fixed_deposits
and I suspect the offer is targeted at businesses and the infrastructure is set up for that. Personal deposits are just a bonus - though the very wealthy can also have similar requirements to such businesses.

Ballard · 7 May 2016 at 2:32PM

They've probably always offered fixed rate deposits but it no longer fits their business plan. Rather than discontinue them altogether they probably just make them unattractive.

why open a 3 month fixed term deposit account paying 0.25% interest?

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