Close savings only 3.75% interest for ONE year.

Moneysaver_fan_2

Close savings premium gold account (2 year fixed rate) is advertised as 3.75% AER and the post office 2 year fixed rate bond at 3.65% AER.
BUT ... post office takes first year interest into 2nd year - so compounded interest in 2nd year. Close account does NOT.
I asked Close to confirm. This is their reply:

Regrettably, we cannot offer compounded interest on this account and interest will automatically be paid away to the nominated account after the first year and at maturity.

If you have any further queries please do not hesitate to contact our Client Services team on 0207 392 1772.

Kind regards,

Matthew Morley
Client Services Advisor
______________________

On an investment of £10,000 the extra earned at Close - compared to Post Office - is just over a fiver.

alanq

Existing thread discussing this account.

https://forums.moneysavingexpert.com/discussion/3026192

VT82

Moneysaver_fan wrote: »

Close savings premium gold account (2 year fixed rate) is advertised as 3.75% AER and the post office 2 year fixed rate bond at 3.65% AER.
BUT ... post office takes first year interest into 2nd year - so compounded interest in 2nd year. Close account does NOT.
I asked Close to confirm. This is their reply:

Regrettably, we cannot offer compounded interest on this account and interest will automatically be paid away to the nominated account after the first year and at maturity.

If you have any further queries please do not hesitate to contact our Client Services team on 0207 392 1772.

Kind regards,

Matthew Morley
Client Services Advisor
______________________

On an investment of £10,000 the extra earned at Close - compared to Post Office - is just over a fiver.

You can't know how much extra you'll earn from Close unless you assume a certain level of interest at which you can reinvest the income paid out after year 1 for the duration of the second year. As you haven't specified, I'm assuming you used 0%, in which case that's just pointless scaremongering. APR is quoted for a reason.

Stochasticity

Even with non-compounding of interest the Close account trumps the Post Office one on rate alone - 3.6822% to 3.65%.

You'll also be able to reinvest the first year's interest from the Close account elsewhere, which would increase the gap between the two.