Newcastle Building Society Interest Rates

laygra

We felt Newcastle's rate of 4.75%, gross monthly, was good and put our life savings of £35,000 into their savings account, but six weeks later (today in fact) they have just sent us an email saying that they have reduced it to 4.55% gross monthly. We feel rather cheated and a friend has said that they do this deliberately and that they may have tempted us in with a good rate only to reduce it shortly afterwards. I can't believe this is true, they wouldn't do this, surely?

Sillychuckie

Welcome to the real world...

This is what banks do all the time. They offer fantastic deals, get the customers in, then reduce the rates shortly after. The only way to truly make the most of your money involves using fixed rate accounts or switching provider more often to keep using the high introductory rates.

Shop around. It is so easy these days to just switch providers... I have started to think less of it these days than buying a new pair of shoes often making the most of introductory rates, freebie incentives or anything else going.

I couldn't tell you off hand what the best provider is for instant-access savings of around 35k right at this time, but im sure if you look at the savings investments board you will find a good alternative (should you wish to switch).
I seem to recall the ICICI name being mentioned recently, but no doubt others will contribute to this post to offer specific details of where might be a good place to transfer to (assuming you are not locked into any conditions such as a loss of interest, with a transfer to another provider etc.).

Greycrow

laygra wrote:

We felt Newcastle's rate of 4.75%, gross monthly, was good and put our life savings of £35,000 into their savings account, but six weeks later (today in fact) they have just sent us an email saying that they have reduced it to 4.55% gross monthly. We feel rather cheated and a friend has said that they do this deliberately and that they may have tempted us in with a good rate only to reduce it shortly afterwards. I can't believe this is true, they wouldn't do this, surely?

I'm afraid they would and do all the time, and not just the Newcastle.
However, there's been a trend, in recent weeks, for some banks and societies to reduce their top rates by similar amounts.
If you want a constant top rate you have to keep shopping around and changing.

RichyRich

It would be a good idea to visit https://www.moneysupermarket.com and find the top rate for that amount - it will give you the best available (probably - I don't think it searched EVERY provider but certainly searches the major ones).

Then move it over!

Have you got an ISA this year? £3000 of that money could be earning interest without tax taken off. Check out Martin's email for details

Rich

ManAtHome

As you said "we", you could each open a cash ISA, so £6k tax-free (and safe).

As others have said, they're all at it, mainly to ensure they get a mention in the mortgages/loans "best buys". Don't believe all the blather about "looking after our customers", they only (sort of) look after people who are borrowing.

It's no big deal to open an account these days - depending on how much time and inclination you have, review rates every few months and switch if you're falling behind.

Ted_Bloke

Yes, as ppl have said you just have to move your money around.
Use the moneysupermarket site as people have said.
AFAIK for your kind of savings, i.e. a building soc. or bank instantly available type the Coventry BS seems one of the best you can get now at 5.1%. But watch out, to get that interest you have to be able to put £1,000 / month in. So if that 35k is all you've got, keep £12k back to feed it. Or maybe you can do something more clever cycling money through the account but remember they have to see £1k credited every month or else no interest.
You sound as though you might qualify for Coventry's Sixty-plus saver which is 5.25%, but you have to build that up at (max) £2,000 /month.

But for both of these the interest rate is only going to last for a year. After that, you'll be looking to move again. That is the way it is, as the others have explained.

There are various others around with higher rates, in general with more restrictive conditions on withdrawals, or regular savings - if you don't mind your money in dribs and drabs here there and all over.

baldbloke_2

It can all be rather dispiriting if you start off believing the Banks and Building Societies exist for the main purpose of helping you to make the most of your savings - as gradually the truth dawns. But as the others rightly say - play them at their game.

In truth for a sum of say £20000 to £50000 I am beginning to think that after putting the maximum into your Cash ISA you are well advised to find the best 1 yr Fixed-Rate Bond (or two) you can and then each year adjust the amount you reinvest after having once again topped up your ISA. I am assuming you pay tax of course.

This completely removes the uncertainty - barring extraordinary short-term increases in inflation - and produces relative peace of mind.
Choose annual or monthly interest as appropriate of course.

For larger sums I accept that Investments start to come into their own as a part of the overall picture.