Interest loss during transfer

Apreciar

Tranfering savings from one bank to another means that potentialy you can lose six days interest, (three out and three in), what is the best way of minimising the loss. For example I have a considerable sum sitting in ING, I want to transfer £35k to ICICI (the safe limit under FSA) and a much larger amount to Bradford and Bingley. I bank with HSBC.

Miss_Penny_Pincher_2

I don't really know to be honest - I always set my transactions to start on a Monday or Tuesday so it arrives at the other bank by Friday then at least don't lose extra interest days over the weekend.

If you are doing a lot of similar transfers in the future Lloyds TSB's recently much advertised current account may be preferable as it pays interest until the transfer is through (around 4% on in credit balances under £5k I think if paying in £1000 monthly). Also when I send transfers from my Lloyds TSB current account on Monday they tend to arrive by Wednesday so faster than many other banks.

grumbler

Usually transfers take 3-4 working days. First transfer to ICICI can take up to 8 working days. Make small trasfer first and you will lose maximum 4 days interest on bigger amount. You can use same day CHAPS transfer, but it will cost £20-£25 - more than the lost interest on £35K. For bigger amount it could be more efficient though.

Zwicky

Ing don't do CHAPS

Stonk

Beldray wrote:

Tranfering savings from one bank to another means that potentialy you can lose six days interest, (three out and three in), what is the best way of minimising the loss. For example I have a considerable sum sitting in ING, I want to transfer £35k to ICICI (the safe limit under FSA) and a much larger amount to Bradford and Bingley. I bank with HSBC.

Do some test transfers of small amounts first, (a) to get things up and running, as the first transfer usually takes longer; and (b) so you can get a feel for how long they take.

Transfer OUT OF the source account on Monday. Put the request in beforehand (e.g., Sunday evening), to make sure it really happens on Monday and doesn't miss a cut-off halfway through the day. The transfer should then arrive in your current account on Wednesday or Thursday. This is the reasoning behind (b), above - build yourself confidence that it will really arrive, in time for the second stage, which is ...

Pre-arrange (at the same time, or on Monday or Tuesday, because you normally have to give them at leat 2 days prior notice) a transfer INTO the destination account for the Friday. These are done by Direct Debit, and are effectively instantaneous, in that the money leaves and arrives the same day and you lose no interest. You could cut it really fine and arrange this for Thursday, but I think it's very risky. In my experience, mostly it would work, but the charges for disallowed DDs are too high to make it worth risking.

Now, of course, your money is earning zero interest for 2 or 3 days, and your current account's rate of interest for perhaps another 2. There's nothing you can do about the first stage. For the latter, you would want to be going via a current account that pays good interest. Those that do, though, only do so on balances up to a certain limit. For example, Lloyds pays 4% on up to £5K. So, what I do is, several weeks in a row, carry out the above procedure with an amount of money that takes my Lloyds balance to just under £5K. Then, at least you are effectively getting 4% on your full £35K for those couple of days, rather than zero on most of it.

Perhaps a bit fiddly, but I can't bear the thought of earning no interest on £35K for longer than absolutely necessary!