Leeds & Holbeck: Online Saver 5.3%

johnllew

L & H Online Saver

Not quite as good as Cahoot's 5.5% (yet) but if you've exceeded Cahoot's £50k limit for the 5.5% (over £50k is 5%), this may well be a good home for the rest. The interest rate tracks the BOE base rate plus 0.55% till March 2005, so may well beat Cahoot if the base rate goes up another quarter point.

The Leeds & Holbeck Online Saver allows you to manage your money over the Internet, which means you can check your balance and transfer money to other accounts at anytime¹; all you need is access to the Internet and an email address.

Online Saver is a variable rate account that guarantees to track the Bank of England Base Rate plus 0.55% gross p.a. until 1st March 2005, after that date, you will receive a variable rate of Interest. Changes to Bank of England Base Rate will be effective from the 1st of the month following the change.

How much can I invest?

You can invest any amount from £100 in our Online Saver. You can add to your account up to a maximum of £100,000 (£200,000 for joint accounts)

How much interest will I earn?

Investment - Gross Rate§ Variable p.a.% - AER%†

£100+ .................5.30..............................5.07

Interest rates effective from 06 August 2004

When is interest paid?

Interest is credited to your Online Saver annually on 31 July commencing 31 July 2005.

What happens if I make a withdrawal?

With an Online Saver you can make withdrawals whenever you choose, without notice or loss of interest, as long as the minimum balance of £100 is retained.

What about income tax?

The gross rate of interest shown will be payable net of the appropriate rate of income tax (which may be reclaimed by non-taxpayers) or, subject to the required certification, gross. If you are a non-taxpayer and require your interest to be paid gross, an 'interest with no tax deducted' certification form can be requested.

Important notes

§ Gross means the rate payable before the deduction of tax.

† AER stands for Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and added each year.

¹ The Leeds & Holbeck Online Savings service will be unavailable each day for 1 hour between 12 midnight and 1am, while our systems update.

ED

Anyone here opened this a/c & been able to log-in?

A member of my family opened one 2 weeks ago, today, but has been unable to log-in despite correctly using Customer Nr., surname, and the 4 requested characters from the Password (several times daily!) Enquiries to the helpful building society staff have drawn a blank, apart from confirming correct settings are in place for our computer to accept cookies.

It was good of L&H to raise the rate 0.25%, to 5.30% gross, on the same day as the Bank of England rise. I agree with johnllew that it's likely this a/c (when fully functional) will surpass Cahoot.

Wondering…as Cahoot's is 5.50% AER, is it really more than, say, 5.37% gross per annum (pro rata) if a customer closes the a/c after about 6 months? Where's Lisyloo when her ultra comprehensible explanations are needed…?

lisyloo

Wondering…as Cahoot's is 5.50% AER, is it really more than, say, 5.37% gross per annum (pro rata) if a customer closes the a/c after about 6 months? Where's Lisyloo when her ultra comprehensible explanations are needed…?

Cahoot and Leeds and Holbeck are both paying annual interest.
This means that gross and AER are exactly the same.
The reason why it works out different for Leeds and Holbeck is that the rate is changing on 1/3/2005.
So you get 5.30 for 7 months then 4.75 for 5 months.
5.30 * 7/12 + 4.75 * 5/12 = 5.07

You can basically do a direct comparison, so currently Cahoot is better than Leeds and Holbeck for ANY period of time at current rate.

Right now for the science bit...............

The reason that gross and AER are sometimes different is that if you get paid interest monthly (for example) then there is the opportunity to get interest on your interest i.e. compounding.
Easiest to explain with an exmaple.

Lets say you have £100 in an account with an interest rate of 3%.
After month 1 you will have £100.25 in your account.
In month 2 you will get interest on your original capital i.e. £100 plus you will also get interest on last months interest.
The concept of "interest on your interest" is called compounding and will give you a higher figure than the gross rate because you are getting a little extra.
Therefore accounts where interest is calculated monthly will have a slightly higher AER than gross rate.

On annual account (like Cahoot and Leeds & Holbeck) the two are exactly the same as there is no compounding.

I hope that's ultra comprehensible

ED

Magnificent, Lisyloo, as always! :-)