Coventry Building Society FR Bonds

geoffreyq

Their fixed rate bonds look attractive. However, the terms and conditions say that, if you close the account at the end of the term (rather than transfer to another Coventry account), it is treated as a withdrawal and you lose three months interest. This seems bizarre. Do they really penalize savers in this way?

johnmoney05

I cant' find the clause you mentioned in the T&Cs...I opened one last month. But anyway, it doesn't matter...I am going to open their First C&S account.

geoffreyq

Clause 8. At maturity....you will have the option to withdraw or transfer...to another account with us,penalty free....."
Clause 10.3 "closure of the account will be treated in the same way as a withdrawal"
Clause 9. "Withdrawals ....are subject to a charge equal to 90 days' interest...."

ReportInvestor

Good spot, Geoffrey.

So transfer to a Coventry Net account (easy access) and then withdraw direct to your current account which you would specify as the linked account.

Or why not open a Coventry First current account anyway?

geoffreyq

Thanks. It seems that your suggestion will work. It pays to read the small print!

dealsearcher

The problem with opening a First account is the requirement for a minimum monthly deposit of £1,000. Now if the Coventry is your main bank no problem, but if you are just taking out a fixed rate bond with them then the First account will only give you a 'nominal' rate of interest without that monthly deposit.

I too have taken out an eBond and also missed the bit about transfering your money on maturity as being a 'withdrawal' with the resulting penalties (it has matured so why?). So you need to check the t's & c's of their First account. Interestingly you could set up a monthly direct debit paying £1,000 in each month with another paying money out shortly afterwards! You are depositing £1,000 per month as required ...

ReportInvestor

Hi ds - you've just described what will happen to the First Account if you withdraw down to a nominal amount and stop monthly payments .

Coventry hasn't got a reputation for being sneaky, but they do have a new boss for the first time in decades - so it's worth keeping an eye out for them after this Fixed Rate Bond trick.

The Bond is still one hell of an offer, though, as is the Coventry First account - even with the £1000pm requirement.

Stompa

ReportInvestor wrote:

The Bond is still one hell of an offer, though, as is the Coventry First account - even with the £1000pm requirement.

Has the been any word about a rate rise from them following the recent BoE hike?

ReportInvestor

Not that I've hear - but it's guaranteed to happen according to the t&cs .

dealsearcher

ReportInvestor wrote:

Hi ds - you've just described what will happen to the First Account if you withdraw down to a nominal amount and stop monthly payments .

Coventry hasn't got a reputation for being sneaky, but they do have a new boss for the first time in decades - so it's worth keeping an eye out for them after this Fixed Rate Bond trick.

The Bond is still one hell of an offer, though, as is the Coventry First account - even with the £1000pm requirement.

I was rather thinking of the situation where Coventry is not your main account (my nearest branch is 20 miles away so it's not my main bank). It is then not the case of stopping the monthly payments but actually starting them. According to their t's & c's you could open a First account with a £1,000 deposit and then have 42 days of the higher interest rate in the First account to transfer your balance out. Although they may take up to '28 days' to do the transfer! (So 2 weeks to make a decision and request the transfer!).

My only concern is if they were to change their t's & c's to penalise people transfering their money at all, but then I suppose they want to have some customers!

PBA

geoffreyq wrote:

However, the terms and conditions say that, if you close the account at the end of the term (rather than transfer to another Coventry account), it is treated as a withdrawal and you lose three months interest.

The terms and conditions only say that if you add misleading highlighting to imply that. Looking at your quote but removing the underlining:

you will have the option to withdraw or transfer...to another account with us,penalty free

So you can either withdraw the money, or transfer to another account. Either way, no penalty.