Close Savings 3 Yr Fixed: is it worth fixing for 3 yrs

Ifts

As the 18 month and 3 year fixed rate accounts are limited offers, they may not be about for long for new customers, especially as they are shown right at the top of the headlines in todays MoneySavingExpert.com weekly email.

Trollop

Ifts wrote: »

[*]

Interest on deposits of £50,000 and over will automatically be paid gross

This might be a stupid question, but when will the interest be taxed then if it is automatically paid in as the gross amount?

mike88

My inclination would be to telephone Close to ask if interest can be paid net. There is no logical reason why it cannot be paid in this way. You could always open 2 accounts with amounts below £50,000.

Otherwise you will have to write to HMRC and declare the interest for each tax year unless of course you fill out an annual tax return in which case you complete the relevant part covering untaxed interest.

Ifts

Trollop wrote: »

This might be a stupid question, but when will the interest be taxed then if it is automatically paid in as the gross amount?

When I spoke* to Close Brothers (post#8) they advised me that interest on £50000 and above will be paid out gross to your linked account, in which case you would have to contact HMRC to declare the untaxed interest and pay any tax that is due.
For amounts below £49999 interest will be taxed before it is paid out to your linked account.

You could always open 1 of each of the accounts (1x 3 yr bond and 1x 18 mth bond) to deposit up to the FSCS £85K limit, for a sole account holder you are not allowed to open more than one of each of these accounts. You are allowed more than one of these accounts if you open one as a sole account holder and the 2nd as a joint account holder.

*This is what I was advised to do when I called them yesterday afternoon to check a few things and ask for an application form to be sent out to me, which I received in the post today! If you want to call them their number is 02073921772, they answered straight away and were very helpful.

barak

sindersoot wrote: »

Any opinions on whether it would be sensible to fix into 3 yrs at this period in time? I'm looking at Close Savings Premium Fixed Rate 5%.

It seems to me a strange time to "fix" - certainly not for 3 years :mad: - when there is ever increasing pressure for interest rates to rise.

malik999

barak wrote: »

It seems to me a strange time to "fix" - certainly not for 3 years :mad: - when there is ever increasing pressure for interest rates to rise.

The problem is people have been posting the same argument for the past 4 years. It seems there is never a good time to commit to a fixed rate. 3yrs is a sensible period I perhaps wouldn't recommend more ie 5yrs.

Ifts

barak wrote: »

It seems to me a strange time to "fix" - certainly not for 3 years :mad: - when there is ever increasing pressure for interest rates to rise.

One could wait forever for better deals to come about, same thing was said about the 3 year Kaupthing Egde (now ING) savings bond paying 7.67% gross in 2009 but I took that one but unfortunately it matures toward the end of this year.

I usually fix for the best rate available for 2/3 year bonds at the time and forget about it, saves having to renew every year. It works for me, some you win some you don't.

barak

malik999 wrote: »

The problem is people have been posting the same argument for the past 4 years.....

It's 2 years - 5th March 2009 - since the rate dropped to 0.50%. I get your point but there are now three members of the BofE Monetary Policy Committee in favour of an increase.

meunier

If nothing else surely this Close advance can be seen as an encouragement for us all that yet more may follow in a similar positive direction rather than the negative ones which have sadly and for so long seemed to over-populate our status quo.

TCA

barak wrote: »

It's 2 years - 5th March 2009 - since the rate dropped to 0.50%. I get your point but there are now three members of the BofE Monetary Policy Committee in favour of an increase.

I don't think savings rates are necessarily going to skyrocket when bank rates rise. Especially if they are only raised by small fractions.