Northern Rock Fixed Rate Bond

marionandpaul

Northern Rock are offering a 5 Yr Fixed Rate Bond paying 4.3% gross. However, it looks like you can terminate the bond (provided you give 180 days notice of closure) at any time without penalty. So, it looks like you can open the account and if and when interest rates look like they are on an upward trend, you can close the account and move the money to take advantage of a higher rate. Am I missing somethin?

derrick

Link to NR

http://www.northernrock.co.uk/savings/fixed-rate-bonds/fixed-rate-notice-bond_issue_1/

Lokolo_2

Think about it though, 180 days is 6 months, if rates rise, you will still have to give 6 months notice so you won't be able to take advantage of increased rates until then, It is better than nothing though! :j

savetilibleed

Suggest instead Coventry BS 4.75% five year bond, where you can make a without notice 180 day interest penalty withdrawal.

gordonc888

aaronmanz wrote: »

Think about it though, 180 days is 6 months, if rates rise, you will still have to give 6 months notice so you won't be able to take advantage of increased rates until then, It is better than nothing though! :j

Can it not be treated as a One Year Fixed Rate Bond? Wait six months and request that you want to close the account so you get back your money at the end of twelve months without loss of interest? Or am I being naive and there's something in the T&C preventing such actions?

psychic_teabag

Can you change your mind about withdrawing ? Or do you have to say in advance how much you withdraw ? Maybe you can immediately give your notice to withdraw, and then when the time comes, either cancel the withdrawal, or just withdraw £1 or something, and then put the notice in again. So if rates do go up, there's a 50% chance that you've only got 3 months to wait, rather than 6.

Even better if you can have multiple overlapping withdrawl requests pending.

Loughton_Monkey

Yes, they are shooting themselves in the foot if they allow withdrawal of cancellation of the withdrawal notice. One year bonds (let alone 6 months ones - if exist) pay nothing like 4.3% and so by keeping a sort of 'rolling' notice of withdrawal on the go, there is strong potential that we all dip our toes in. As time goes on we would all become progressively 'ahead' of a 1 year alternative - so much so that there would be little danger of us losing money overall in the next 6 months.

I could see nothing in their terms to clarify. If they were to have a policy of 'once you give notice - then you must follow it through' then this minimises their problem, but it still looks good. For example, at the very least shove it in. Wait 6 months. Give notice and follow it through. Then you have simply received 4.3% for (effectively) a 1 year bond.

Grumps

psychic_teabag wrote: »

Can you change your mind about withdrawing ?

Seemingly, yes!

Reading their T&C's,

4. Notice periods
4.1 Where a product leaflet specifies a minimum notice period
for withdrawals you must give us notice if you want to
make a withdrawal or to close the account............................

And then,

4.4 Please note that you must contact us again and give us
separate instructions when you wish to make the
withdrawal or close the account. Withdrawal or closure
will not be automatically processed on the basis of the
notice given under condition 4.1.

Which, if I'm reading it correctly, the 'notice' does not obligate the withdrawal of funds once the time period expires.

It seems a good offer and for a couple investing equal amounts, the 'rolling notice' could be offset by three months meaning that 50% could be moved fairly swiftly. The only downside I can see is that the best rate is on interest calculated annually, so withdrawing mid or part year should be avoided.

bandana999

Edit....Ooops! Beat me to it!

Terms and Conditions
4.Notice periods
4.1Where a product leaflet specifies a minimum notice period
for withdrawals you must give us notice if you want to
make a withdrawal or to close the account. You will incur
a charge if you make withdrawals or close the account
without providing the minimum notice as explained in the
product leaflet. Any such charge will be offset against any
accrued interest not yet paid, but if there is insufficient
accrued interest any outstanding charge will be debited to
your account, either when interest is paid or on closure,
whichever is earlier. If this causes the account to become
overdrawn we will tell you and you will pay us the amount
by which you are overdrawn.
4.2HM Revenue & Customs (‘HMRC’) has advised us that a
charge of the type referred to in condition 4.1 is not a
reduction of interest but loss of capital. Therefore any
portion of charge deducted from capital is not a reduction
of interest but a specific charge for early withdrawal.
4.3The notice you give us under condition 4.1 will be valid
for up to 14 days after the minimum notice period has
expired. After this has passed if you want to make a
withdrawal or close the account you must give us fresh
notice, and the minimum notice period will start again.
4.4Please note that you must contact us again and give us
separate instructions when you wish to make the
withdrawal or close the account. Withdrawal or closure
will not be automatically processed on the basis of the
notice given under condition 4.1.

pwhitf

I opened this account today. Was told by Northern Rock advisor that each 180 day withdrawal notice has a two week life span before it lapses but you can go in every two weeks and give another notice. so after 6 months it will be effectively instant access. A hassle but almost double the rate of any instant access account and well over 1% more than any 6 month bond

bandana999

pwhitf wrote: »

I opened this account today. Was told by Northern Rock advisor that each 180 day withdrawal notice has a two week life span before it lapses but you can go in every two weeks and give another notice. so after 6 months it will be effectively instant access. A hassle but almost double the rate of any instant access account and well over 1% more than any 6 month bond

Are you sure that's what they meant?
Surely they mean you can give notice again 2 weeks after the first 6 month notice, then a new 6 month notice begins .
That's how I read the terms anyway
4.3The notice you give us under condition 4.1 will be valid
for up to 14 days after the minimum notice period has
expired. After this has passed if you want to make a
withdrawal or close the account you must give us fresh
notice, and the minimum notice period will start again.