Loss of interest during transfers

steveksullivan

I'm sure this has been discussed before but .........

Just found (thanks to MSE) Saga fixed rate at 7.02% AER but for six months only.

I estimate that to remove money from another provider to linked account, then allowing for delay in getting money to the new account I will lose circa 6 days interest. Having done the calculations I reckon I will be no more than £9 better off in the new account over the whole term. If you then also take into account the same delays at the end of the fixed term I could even be be worse off !! I guess if I was going for a longer fixed term benefits would be greater, but this is quite a large differential between interest rates (6.52 against 7.02% which equates to 0.5%) generally we are looking at much smaller differentails so the loss during transfer is even more significant.

Am I missing something?

Have any MSE's got a better way of doing things, short of having a heavily funded account with all providers so transfers will generally take place same day !!!!

Hope this makes sense........

*** should have added these figures are based on £29K ****

apt

Often the delay/loss of interest is quite a bit longer as most people tend to move their money to the same table-topping accounts which get swamped with applications and tend to be very slow. I probably lost 10-14 days interest moving to the NatWest ISA and the AA 7.21% fixed-rate recently. I'll still get more interest over the whole 12 months, but interest rate chasing for very short-term fixes or small differences in rates usually is not worth the hassle.

Mikeyorks

It's unclear how the SAGA account is funded. If it's by DD pulled from the nominated account - then that's interest loss neutral. And if you can fund the nominated account by Faster Payment - then minimum loss there. So no real issues?

But - yes - money in the ether is an issue you need to consider as part of the overall package of benefit or dis-benefit. Dozens of earlier threads - you just need to dig down a bit to earlier dates.

As the SAGA account you quote is 6 months .... the relevant figure to look at is that it's actually 6.9% gross. They do a 12 month one at 6.85% .... so that eases 'set up' costs?

I recently put money into Anglo Irish fixed at 7.05%. But that's a bigger initial pain as (new customer) the initial funding is by cheque.

Baldur

Mikeyorks wrote: »

It's unclear how the SAGA account is funded.

By cheque, on receipt of 'welcome pack'.

kruml

apt wrote: »

Often the delay/loss of interest is quite a bit longer as most people tend to move their money to the same table-topping accounts which get swamped with applications and tend to be very slow. I probably lost 10-14 days interest moving to the NatWest ISA and the AA 7.21% fixed-rate recently. I'll still get more interest over the whole 12 months, but interest rate chasing for very short-term fixes or small differences in rates usually is not worth the hassle.

It's worth checking an institution's policy before applying. I've been waiting over three weeks for the AA to open my account. They told me yesterday that they date stamp applications upon receipt and if it takes more than 5 days to open an account, they back-date the interest to then - so you can calculate the maximum cost beforehand.

steveksullivan

Thanks all

Mikey, Baldur is right, cheque on receipt of welcome pack (receieved this morning!)

Will probably go ahead on this occasion as part of the reason for the move is to take funding of one of my accounts below the £50k guarantee, but I'll think twice abiut chasing small interest rate rises in future!

Any more comments gratefully received!

** BTW this post crossed with Krum's:

Answer is they say they will credit the account'within 5 days of receipt of cheque' ..... no mention of any backdating here......**

kruml

steveksullivan wrote: »

Thanks all
** BTW this post crossed with Krum's:

Answer is they say they will credit the account'within 5 days of receipt of cheque' ..... no mention of any backdating here......**

I think that's what they're saying. So even though they haven't cashed the cheque a month down the line, your account is still credited 5 days after receipt.

I've also been putting the money back on deposit over the weekends too.

YorkshireBoy

Steve,

Who's the provider for the 6.52% account you're switching from?

apt

kruml wrote: »

I think that's what they're saying. So even though they haven't cashed the cheque a month down the line, your account is still credited 5 days after receipt.

I've also been putting the money back on deposit over the weekends too.

I also got the it will be backdated spiel from the AA, but it hasn't been in my case. They received my cheque on 8 or 9 October and that deposit is now dated as going into the account on 23 October. I would not necessarily go by verbal assurances from a call centre.

steveksullivan

Some coming from A&L at circa 6.5%, but I also have some in BM http://www.askbm.co.uk/ at 6.52%. As this acccount already exists and would be easier to transfer into, I used it in the comparison to keep things 'simple' (!!)

DocProc

I recently funded TheAA Fixed Term Savings Account with a cheque.

The interest on it kicked off from the day I paid the cheque in.

Meanwhile, the cash to fund the cheque sat in my bank's Online Saver, waiting for the cheque to be presented.

On the morning the cheque showed up in my bank's Current Account, I duly transferred the funds out of the Online Saver account into the Current Account to meet it.

Result? The amount earned double interest for a period of about 3 days.