Interest Rate Slashed - What would YOU do?

bartsimpson

I've just been told by my bank manager that the money markets related business account I have is up for renewal (it's renewed every month), and the interest rate has been slashed from 4.9% to 2.2%. :eek:

It's a substantial sum of around £250,000 - what would you do?

Reinvest for another month at only 2.2%, leave it in the current business reserve account, or move banks for a better deal?

Surely there must be better rates than this available for small risk???

Etccarmageddon

I wouldn't have £250k in one account - I'd spread it out and also stick with safer UK banks like lloydstsb. for the sake of 2.2% interest I wouldnt have all that dosh in one place - and next month I recon interest rates might go down 1/2%.

you might be better off taking some money out and paying it as a dividend and then paying off some of your mortgage?

Stonk

Similar position myself. Renewal of my business' Abbey time deposit in a couple of weeks time will see a big drop in rate. I think we're talking about the same things - fixed interest, fixed term, money-market-related accounts, with no way to access money until maturity (at which point you roll over or withdraw).

Close Brothers Bank (a quoted UK public company) are paying reasonable interest. Today they quoted me 3.85% for £75K for 3 months, which is pretty good despite being a bit less than their stated minimum deposit of £100K. Larger amounts get better rates - judging from indicative figures on their site, I think you should expect about 4.00% to 4.25% on any portion you felt you could tie up for a few months. The rates increase quite markedly with the term.

You can CHAPS (at your cost) or BACS money in to them, and it looks like they'll CHAPS it back out to you for free when you want it back. I think it will be worth the CHAPS fee, to get earning interest immediately.

http://www.closetreasury.co.uk/ (treasury division site)
http://www.closebrothers.co.uk/ (main company site)