Variable Rate Term Bond - This made me laugh

VT82

I've seen today that the Progressive Building Society are offering a 'Limited Issue 1 Yr Variable Rate Bond Issue 1'.

I'm not sure if I can post links (try this: http://www/theprogressive.com/savings/product/13/689), but it is a bond paying 2.75%, with no withdrawals before maturity on the 1st September 2011, but the rate is entirely variable at their discretion. How dumb is that???

Why would anyone invest in a product which, not only pays less than the best buy access account, but unlike the best buy access account, if they drop the rate down to nothing, you still can't withdraw your money? It can only end in tears - and complaints!

Sorry if this has already been posted but I was trawling different Building Societies websites (as you do!) and this caught my eye, so I thought I would give someone else a laugh.

evenasus

I wonder if the word 'variable' has been used in error.
If not, they won't, I'm sure, get any takers.
Your link didn't work - this should. http://www.theprogressive.com/savings/product/13/689

VT82

Definitely not a mistake - they refer to it lots of times, that it will roll over onto another variable rate bond, and that fixed rate bonds are also available.

If they can get any takers for that, it shows that it's worth banks and building societies launching any old tat in the hope of attracting a few suckers.

Stompa

Oddly, it says here:

https://www.emoneyfacts.co.uk/news/savings-news.aspx?newsarticleid=196928

This variable rate bond is a welcome addition to the savings portfolio of Progressive BS and joins the growing variable rate bond market.

VT82

That is weird. It doesn't say anywhere on the Progressive website that it tracks Bank Base Rate, only that it is variable. If it does track BBR, it would be pretty good, but I'm sure it won't otherwise they would advertise that fact.

The only other thing I could think of is that maybe if they drop the rate, they will HAVE to allow you to withdraw penalty free, following the change in FSA rules allowing you to withdraw without penalty or notice for a set period when rates are dropped on variable products. But once again, I bet they would get around this due to it being a fixed term bond.

Stompa

VT82 wrote: »

That is weird. It doesn't say anywhere on the Progressive website that it tracks Bank Base Rate, only that it is variable. If it does track BBR, it would be pretty good, but I'm sure it won't otherwise they would advertise that fact.

It doesn't say on the emoneyfacts site that it tracks base rate either.

VT82

True - it says 'the variable rate which may change if base rate does rise'. Obviously not paying attention.

I still think it's more likely they will drop the rate after 6 months and argue that it was 'in line with prevailing movements in market rates', and certainly wouldn't pass on the full increase in BBR if we were to see one.

I've emailed the Progressive anyway. Not that I would invest in it either way, I'm just picking at it like a scab lol.

Stompa

The thing that puzzled me most is why there is a "growing variable rate bond market"?

Sceptic001

Stompa wrote: »

The thing that puzzled me most is why there is a "growing variable rate bond market"?

Last week there were none; now there is one... :rotfl:

Onawingandaprayer

Actually, I've discovered there is a growing crap rate bond market. Anyone want details?

VT82

Sceptic001 wrote: »

Last week there were none; now there is one... :rotfl:

I saw that Yorkshire had one at BBR+1.25% for a year, which allowed withdrawals with a penalty. It's not great, but at least it's not complete nonsense.