State Bank of India 5-year stepped fixed rate account

Sceptic001

I have not seen this product mentioned elsewhere on this site.

It pays 3.25%, 4%, 4.5%, 5% and 5.75%.

It differs from all other stepped rate deposits I have seen in that you get the option to withdraw without penalty on the 2nd, 3rd and 4th anniversaries, thus avoiding the problem of being locked in if interest rates rise. SBI has FSCS protection.

For anyone happy to tie up their money for a minimum of two years, I can't see any drawbacks. Am I missing something?

KingL

it's in Martin's weekly email this week (week beginning 18th Aug) and in the savings guide. I've been meaning to check the maths, in case (1) those rates apply within each year, or (2) cumulatively upto and including each year or (3) something else, but I haven't got around to it...


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cashbackproblems

Nope no catches, im in the process of opening one now, probably the best fixed rate account around at the moment

Stompa

Sceptic001 wrote: »

I can't see any drawbacks. Am I missing something?

It's stating the obvious I guess, but stepped accounts are effectively imposing a penalty for early withdrawal by offering lower interest rates in the early years. I've not done the calculations though, so am not suggesting that this is particular account is any worse (or better) than similar fixed term ones.

KingL

For me, I reckon the Newcastle one looks better in years 1 & 2, then India brings up the rear in year 3 and onwards. I'm hoping that they'll be some better deals around by then anyway.

Also, Newcastle's slightly more flexible as you can withdraw any time of the year (with 120 days notice), rather than just on anniversaries.

Still, horses for courses...

le_loup

Sceptic001 wrote: »

I can't see any drawbacks. Am I missing something?

Apart perhaps from having to open a current or additional savings account.

Sceptic001

le_loup wrote: »

Apart perhaps from having to open a current or additional savings account.

Yes, I hadn't noticed that. Not an insurmountable problem, though - their instant access account pays 2%. Perhaps cashbackproblems will let us know how the application progresses.

oly2c

It's a bit of a hassle opening a feed account. They need a copy of a driving licence or passport certified by a banker, solicitor or notary. As my banking is done on the internet I wonder if my local Post Office, which I use for occasional access to Smile and Egg accounts, would count as a banker! The other options involve unwanted expense.
I wish I'd put more into my 5% Newcastle account with 90 day access when it was available.

Arthurian

Number 10 in their T&Cs is "The deposit may be closed on the 2nd anniversary or any subsequent anniversary with full payment of interest."

Does that mean closed by them or by the depositor?

KingL

The intent behind the clause is that the depositor can close it on the 2nd, 3rd, 4th anniversaries (but not the first).

Most T&Cs have a list of criteria under which the provider can close early (usually if the client fails to fulfil his obligations). I haven't read their T&Cs, but I would think that that point is covered in there somewhere.

oly2c

oly2c wrote: »

It's a bit of a hassle opening a feed account. They need a copy of a driving licence or passport certified by a banker, solicitor or notary.

I found that UK residents don't need certified documents