Variable bonus rates?

ants99

Hi,

Just looking for an instant access savings account, and I note that most have bonus rates applicable for the first year. I am happy to shop around again in future when the bonus expires, thats no problem but most of the bonus rate are 'variable'.

Does this mean they typically drop the bonus rate to something low shortly after lots of people sign up, or do they tend to stay the same, but have it variable just to cover themselves?

The only one I can find with fixed bonus is ING, but its a bit lower than the other variable rates.

Any experience of these variable bonus rates? I presume they have to write to me and notify me if their bonus rate is changed?

Thanks

Anthony

CLAPTON

Normally the structure is a variable basic saving rate plus a 'fixed' bonus... it that what you mean?

G_M

You'll find that the bonus is always fixed (sticking my neck out a bit there), so the bigger the bonus the safer you are. The variable basic rate as Clapton says could drop, potentially to near zero, but you'd still get the bonus element. If in doubt, call the bank to confirm before you apply!

LesU

ants99 wrote: »

Hi,

Just looking for an instant access savings account, and I note that most have bonus rates applicable for the first year. I am happy to shop around again in future when the bonus expires, thats no problem but most of the bonus rate are 'variable'.

Does this mean they typically drop the bonus rate to something low shortly after lots of people sign up, or do they tend to stay the same, but have it variable just to cover themselves?

The only one I can find with fixed bonus is ING, but its a bit lower than the other variable rates.

Any experience of these variable bonus rates? I presume they have to write to me and notify me if their bonus rate is changed?

Thanks

Anthony

My only experience of these variable bonus rates is with Egg. They offer this type of savings account. In December the bonus went up. What was previously 5.05% with a 1.8% bonus, went down to 4.05% with a 2.05% bonus. So the rate that the account will revert to after 12 months has reduced by 1.25%, even though the new rate was only reduced by 1%.
Why they do this I have no idea. They could, and do, just issue a new account with different rates and withdraw the old one.

A bank doesn't have to tell you personally that the rate has fallen, they are allowed to just publish it in a newspaper and up to 28 days after the event. Egg do mailshot you with the updated rates about 10 days after they've changed.