Instant Access Savings Accounts Article Discussion Area

SRL

i have just checked with Alliance and Leicetser as an existing customer with other accounts. the interest on a driect saver account will be paid into an Alliance and Leicester account on the 1st of each month and the 6th of each month if going into another bank account. Even if you withdraw all or some of the direct saver on the day after the interest is paid, ie withdraw cash or close the account on the 2nd or 7th then it appears Alliance and Leicesster will deduct the previous months interest from the account. on a savings account of £100,000 that would be inexcess of £400. so it appears whenever you close the account you will always pay the last months interest as a penalty?

MarkyMarkD

SRL

I don't know why you understand it like this.

Interest on Direct Saver is earned on the account during each month, and then credited to the account on the 1st day of the following month.

The User Guide states that no interest is earned, not paid in any month in which a withdrawal occurs.

So, if you deposit £10,000 on 1 November, and then withdraw the whole £10,000 on 1 December (plus the accumulated interest which will already have been credited to the account) then you have earned 5.25% during that one month which is equivalent to 5.38% AER.

There is no deduction of previous months' interest going on here.

MarkyMarkD

whambamboo wrote:

I think the A&L is designed to trick the saver, as very many people will haveand if you are going to push an account with tricks, it should be very clear how to outfox them.

I don't agree, and I've opened the A&L account.

It's very clear how the interest thing works - and it's on the main page describing Direct Saver in bold type on their website.

It's obviously not intended for people who want to do lots of withdrawal transactions, but for people who intend to save for a while and then withdraw the whole lot for some purpose.

If you use the account like that, then it delivers the advertised rate which is better than almost anyone else's.

You are quite right that anyone who chooses to withdraw their funds at the end of a month is daft.

The other thing to be borne in mind is that you can always withdraw all of your money (leaving £1, probably, knowing A&L) on the 1st day of one month, stash any of it you don't need in your other nearly best buy account (like with IceSave, for example), and re-deposit the rest on the 1st day of the following month, if you suddenly need part of the money unexpectedly. That way you won't lose much interest (apart from the days in transit) - and, bear in mind, I'm only suggesting this if you have an unexpected need for the money.

If you want to withdraw money on an ad hoc basis, obviously the A&L account isn't for you.

taffette

First time here so please bear with me. I am thinking of opening an account with Icesave and am wondering whether it is financially better to have interest added monthly (5.08% AER) or annually (5.20%) At the moment I am with ING at 4.75% AER and that interest is added monthly. Any help gratefully received.

murphydavid

SRL wrote:

i have just checked with Alliance and Leicetser Even if you withdraw all or some of the direct saver on the day after the interest is paid, ie withdraw cash or close the account on the 2nd or 7th then it appears Alliance and Leicesster will deduct the previous months interest from the account.

Did someone from A & L actually tell you this? That they will deduct interest already added? What if you withdraw the whole lot including the interest? that leaves you with an overdrawn savings account. Surely not.
First direct has similar conditions - if you withdraw the whole balance on the day that interest is added there is no loss of interest all previous interest is yours and secure.

murphydavid

taffette wrote:

First time here so please bear with me. I am thinking of opening an account with Icesave and am wondering whether it is financially better to have interest added monthly (5.08% AER) or annually (5.20%) At the moment I am with ING at 4.75% AER and that interest is added monthly. Any help gratefully received.

I just looked and the monthly rate is 5.08% = (5.20% AER) Not 5.08% AER that means both the Monthly and Annuall rates are the same. But you end up with 5.08% if you take out your interest every month because you wont then get interest on the interest you withdrew.
Hope that helps

SRL

I rang Alliance and leicester to make this specific enquiry and was told that if i closed the account after the interest had been paid to another account ie on the 2nd of the month they would deduct one months interest from the actual amount in the account hence my post. Please would someone else check this out for confirmation. it is an important issue on the account.
For the attention of markymarkd and Murphydavid in particular

whambamboo

SRL wrote:

I rang Alliance and leicester to make this specific enquiry and was told that if i closed the account after the interest had been paid to another account ie on the 2nd of the month they would deduct one months interest from the actual amount in the account hence my post. Please would someone else check this out for confirmation. it is an important issue on the account.
For the attention of markymarkd and Murphydavid in particular

yep, like I said, this account is more trouble than it's worth, and is intended to con the average saver out of their money. This one should not be recommended at all.

valiant

SRL wrote:

I rang Alliance and leicester to make this specific enquiry and was told that if i closed the account after the interest had been paid to another account ie on the 2nd of the month they would deduct one months interest from the actual amount in the account hence my post. Please would someone else check this out for confirmation. it is an important issue on the account.
For the attention of markymarkd and Murphydavid in particular

I also rang A&L this morning and was told the exact opposite i.e. that the account works as advertised and if you withdraw all the funds on the 1st of the month then you will still have the previous month's interest credited, in full, to the account as normal. The only interest you would lose would be for the time it took to transfer the funds to the linked account.

In any case, A&L are legally bound to honour the terms and conditions of the contract you enter into with them. Clause 36.9 of those T&Cs state:

"36.9 If you make a withdrawal from Your Account no interest will be
payable on the whole balance for the calendar month in which the
withdrawal was made."

There are no other terms that qualify the above clause so if A&L were to make any further interest deductions they would be in breach of the contract and you would have a watertight case against them in the Small Claims Court and/or a complaint to the Advertising Standards Authority.

Can I ask that if anyone else contacts A&L on this point, and are told otherwise, that you PLEASE ask the person you speak to for the specific term(s) in the T&C's that gives them the right to deduct further interest. It's not there!

MarkyMarkD

I've not been well, so I haven't had chance to follow this up with anyone at A&L. But I agree with valiant - there is no such term and condition. I can only suspect that the person SRL talked to at A&L hadn't been trained on the new account, or had misunderstood their training.

Banks simply can't make up Ts & Cs and seek to enforce them, so I wouldn't worry about something which isn't there.