Banks to restrict access to savers money

kostigovs

http://www.thisismoney.co.uk/savings-and-banking/article.html?in_article_id=496389&in_page_id=7&in_page_id=7&expand=true#StartComments


It was always going to be just a matter of time

rb10

I wonder if this will actually have any effect on the average customer.

I expect that the majority of people open a fixed rate bond under the assumption that they will not be able to withdraw early, as even if it is permitted (with penalty) in the T&Cs, these accounts are (generally) marketed as allowing no withdrawals.

housesitter

Article should probably say fixed term rather than fixed rate.

So what is the problem?
If you can't put the money aside for the whole of the fixed term, it's the wrong product for you.

Get a different one.
Simples.

Paul_Herring

Customers can currently withdraw money from fixed-rate bonds as long as they are willing to pay a withdrawal penalty that is typically equal to several months' interest.
[...]
They could also lead to more fixed rate bonds stopping withdrawals altogether.

Emphasis mine.

Non-story. Typical DMTG controversially reporting something that's been going on for ages.

kostigovs

I disagree that this is a non-story. There are many posters on here who openly admit that they are looking for fixed rate bonds that have escape clauses in them.

I do agree with Housesitter however and admit that is the approach i always take

Nick_C

The requirement to have greater cash holdings - shouldn't that be good news for savers? More demand for our cash?

D1zzy

I don't believe this affects the Ts & Cs for existing bonds where a get out with penalty is permitted.
Future fixed rate bonds may be tighter - but as long a the Ts and Cs are clear there should be no problem for savers. I have a couple of 5 year bonds with a 90 day penalty. I don't expect to need to withdraw unless interest rates shoot up massively, but I would not have locked up money for 5 years without that option. Banks will find it harder to get people to commit to long term fixes with no withdrawal options - maybe decent 1 year fixes will return

Masomnia

Nick_C wrote: »

The requirement to have greater cash holdings - shouldn't that be good news for savers? More demand for our cash?

It's good news for everyone, since it should help prevent another Northern Rock. But theoretically yes, it should mean more demand for cash, though it could also just mean less lending.

I thought that most fixed rate accounts were like this anyway, and that those with get out clauses were in the minority, apparently not!

D1zzy

housesitter wrote: »

So what is the problem?
If you can't put the money aside for the whole of the fixed term, it's the wrong product for you.
Get a different one.
Simples.

Its not about putting money aside for the whole term, but being able to extract it if the economic climate changes ( 5 years is a long time ...) People are locking in at 4/5% at the mo, if we get rampant inflation (I can remember mortgage rates at 15%) - they will be losing money and looking to take advantage of better rates.

Masomnia

D1zzy wrote: »

Its not about putting money aside for the whole term, but being able to extract it if the economic climate changes ( 5 years is a long time ...) People are locking in at 4/5% at the mo, if we get rampant inflation (I can remember mortgage rates at 15%) - they will be losing money and looking to take advantage of better rates.

True, which makes them a riskier product, so you get a premium rate for that extra risk. It's fair enough really.

tartanterra

I don't think that this is a bad thing.

As stated before by Masomnia, it could help prevent another Northern Rock.

But the main benefit for savers, is that the banks are going to have to pay a decent return in order to convince people to give up access to their savings for an extended period of time.