Switching accounts - loss in interest

Squibbler

Hi

I'm sure I must be doing something wrong...

I shop around for the best rates for my savings, ISAs etc, but when it is time to move them, I lose so many days of interest. What am I doing wrong?

Because Faster Payment has a maximum limit of 10000 at best from most institutions, I am left with only the options of BACs where I lose several days interest or paying around £30 for same day transferal.

I usually have to lose 3 days of interest using BACS to transfer money out of a savings account into a linked bank account and then a further 3 days (plus 2 days of weekend) transferring the money to the new savings account. All in all the loss of 8 days of interest (and only then if I time it right!

Sometimes I might miss the end date for my rate as it happens over a weekend with penalties if I take it out earlier or the new account might require money being sent by cheque which means extra days while our snail mail postal service delivers my cheque. In this electronic age, surely we can do better?


I'm sure if I calculated the rate I actually get taking into account the loss of interest during moving my money, it would be far less than advertised. And ISAs are a joke - you can lose 30 days of interest before an institution will release the money. Why are they allowed to hang on to it for so long? If you are locked into a rate you have to wait for the rate expiry date to move the money then lose up to 30 days interest before you can reinvest.

Does anyone have any tips on how to manage all of this? Maybe it is better to lock the money away for longer and run the risk of losing out on rates going up, because at least I wont lose out during the transfer period, especially regarding the ISAs. So many of the institutions offering the better rates have these outdated postal methods of transferring money. It's crazy!

opinions4u

1. If you're worried about amount in excess of £10k, you can afford it .

2. Interest is now payable from the 15th day of an ISA transfer - regardless of whether or not the transfer is complete.

3. Next year will see all electronic movement of funds reach the destination account before the end of the next working day.

4. Halifax and Nationwide pay interest from the day they receive your ISA transfer form - regardless of the time the transfer takes.

alanq

opinions4u wrote: »

3. Next year will see all electronic movement of funds reach the destination account before the end of the next working day.

I have read about the EU Payment Services Directive (that comes into effect on 1 January 2012) that says that payments should reach their destination by the (working?) day after they are initiated. However, I wonder if there is a transition period involved because nowhere have I heard or seen anything indicating that this will happen in the UK that soon. (BBC Radio 4 Moneybox mentioned FP and PSD on Saturday but made no mention that things would change by January.) Some organisations currently don't offer Faster Payments at all. Others have very low transfer limits.

Do the rules apply only to banking accounts rather than savings accounts?

opinions4u

alanq wrote: »

Do the rules apply only to banking accounts rather than savings accounts?

Some accounts are covered by BCOBS regulations (typically notice accounts, term deposits etc) whereas others are covered by PSD. The latter will include all current accounts and some savings accounts (typically easy access ones or those that provide a payment functionality such as remote providers Egg, ING etc tend to).

Only those in charge of regulating financial services (the EU, the FSA etc) could be stupid enough to have different sets of rules applying to accounts that customers would have little idea how to differentiate!

Milarky

opinions4u wrote: »

Some accounts are covered by BCOBS regulations (typically notice accounts, term deposits etc) whereas others are covered by PSD. The latter will include all current accounts and some savings accounts (typically easy access ones or those that provide a payment functionality such as remote providers Egg, ING etc tend to).

Only those in charge of regulating financial services (the EU, the FSA etc) could be stupid enough to have different sets of rules applying to accounts that customers would have little idea how to differentiate!

Still, the idea of a 'Big Bang' on 1 January 2012 - fatuous though that is - would be just the sort of thing to apply to these jokers wouldn't it? Been there before (actually we're still there) with Faster Payments and the banks who give NO INDICATION of their positions because (well) all that expensive regulation doesn't ask it of them.

As usual the wheels of change grind slowly - and only move at all, it seems, because of something called 'European interference'

Well, Vive l'interference!

Loughton_Monkey

Squibbler wrote: »

I shop around for the best rates for my savings, ISAs etc, but when it is time to move them, I lose so many days of interest. What am I doing wrong?

Well worrying about it, for a start!

It is 'The System', and sadly we have to live with it. But it is changing.

It is relatively simple to calculate in advance how many days interest (and thus interest amount) you are losing out on by switching. Almost as easy as working out how much extra you are going to earn, per day, when it's there.

Squibbler

Opinions

Sadly, I can't afford it - its money from my deceased MIL's house sale that I will now need to invest to pay for my kids Uni education!

That's great news about the improvements coming along to instant electronic payments. One of the BSocs mentioned to me today that they dont use FP at the moment because of its lack of security but they will be later in the year when the security gets tightened. I'm assuming this is the same improvements you mention?

Nwide might be better on ISA transfer, but they lag behind the banks, only allowing 1000 in FP rather than the usual 10000 so I am hoping they will up their game this year too.

Loughton Monkey

Well it may be the system but it's rubbish. I tried to make a payment from my Barclays account today to Santander (A&L as was). Barclays only allow FP online, but Santander don't allow FP into savings accounts due to "security weaknesses" in the FP system so my attempt bounced. I then found out I have to go into my Barclays branch to make the payment via BACS as despite the electronic world we live in, it is not possible to do it online. So I have to rush down there tomorrow if I want the money to reach Santander before the weekend else I get to lose a further 2 days of interest.

I opened an account today with Birmingham Midshires. Despite my already having money in another account with them, because this one is online, I have to waste valuable days of interest waiting for forms to arrive by post and then sending them back... we live in an electronic world, things really shouldn't be this slow.

talexuser

Squibbler wrote: »

Santander don't allow FP into savings accounts due to "security weaknesses" in the FP system

strange... today I changed my Santander esaver account over the phone to the new higher interest one, went to the new account online to check it, then went to my bank online put the new details in and did a test FP of £1, went back to the Santander site, and the money was there.

Squibbler

talexuser wrote: »

strange... today I changed my Santander esaver account over the phone to the new higher interest one, went to the new account online to check it, then went to my bank online put the new details in and did a test FP of £1, went back to the Santander site, and the money was there.

Yes you are right - I was given the wrong info yesterday by A&L/Santander after my payment from Barclays to them failed... I tried again today but left the three letters off the end of the account code reference as someone suggested to me today, and it went through fine. But on my 5th phone call to them yesterday trying to sort this out the guy I spoke to gave (incorrectly) the reason my payment had failed was because their savings accounts don't accept FPs! He told me the payment team had just confirmed that with him too!

The first 4 phone calls had told me I needed to use the compl;ete code with the letters on the end. Why can't they just get their advice correct and consistent?

Squibbler

Oh and Barclays couldn't get their story straight either ...despite what I was told by Barclays on the phone, it seems the BACS versus FP method is decided by the sort code of the payee and cannot be selected by Barclays sending it... Barclays in branch cannot send things by BACS by choice, or an amount over 10,000 via a free method (expensive CHAPS being the only way)!

talexuser

Squibbler wrote: »

an amount over 10,000 via a free method (expensive CHAPS being the only way)!

I'm with the Halifax and when I needed to send money through the current account (which had a 15K online transfer limit) just opened multiple online transfer accounts with the same codes and sent 15k through each on the same day to avoid chaps charges, so check if you can do this.