Halifax - Stepped Income Reserve

Chorlie

Hi,

Was in Halifax today looking at opening a Rewards A/c and the guy was also telling me about this Stepped Income A/c that pays 3.5% in the first year and increases each year by 0.5%. He said I can close it after 12 months, but I'm looking for some thoughts on it.

Cheers.


http://www.halifax.co.uk/savings/accounts/other-savings-accounts/stepped-income-reserve/?pagetabs=2

apt

If you closed it after 1 year you would pay a 288 day interest penalty.

Chorlie

apt wrote: »

If you closed it after 1 year you would pay a 288 day interest penalty.

So does that mean I wouldn't get out what I've paid in, if I took monthly interest.

He implied I could just close it after a year.

ses6jwg

No withdrawals allowed

Early closure permited after 1 year. You'll lose the equivalent of 6 days interest for each remaining month or part month of the term (minimum 30 days)

EltonJohnFan

Hi,

In all honesty, I think it's a good account at this moment in time, and one that I'd go for myself but do be aware of the penalties and small print. If you can be sure that you won't need the money within a set period of time then I'd seriously consider it but my reservation with recommending this sort of account is that many people have asked me for my opinion on them and they've invariably needed their money back at some point which means they're heavily penalised for withdrawring their money... if being allowed to withdraw their money at all.

Best wishes.

premierfella

That interest penalty is even worse than it first appears as it is at the year 5 rate (5.5% gross), not at the current prevailing rate (e.g. 4% gross in year 2).

opinions4u

From memory I think it has an AER of 4.5%.

The AA 5 year term deposit pays 4.55%, and I think someone like ICICI has a 4.6% option.

Unless the escalating rate is of particular appeal, I'd chase the AER. If early closure is something that you feel is essential, I'd avoid it.