AA 5-Year 5%

alanq

http://www.theaa.com/savings/fixed-rate-savings-accounts-products.html

The AA is now offering a 5% AER 5-year bond £1 minimum deposit. Interest can be compounded or paid away.

Unlike most other such accounts early access is permitted with 90-365 days penalty depending on the year in which the request is made.

The Ts&Cs are confusing.
"withdrawals are allowed by post subject to a loss of interest on the amount withdrawn, depending on when a withdrawal is made.
1 year or less: 90 days loss of gross interest
Up to 2 years: 180 days loss of gross interest
Up to 3 years: 270 days loss of gross interest
Up to 4 years: 320 days loss of gross interest
Up to 5 years: 365 days loss of gross interest"

But is that n years from the start or end?

eMoneyFacts is clear and indicates that it is from the end (but I'd want the AA to confirm this)
"Earlier access on 365 day loss of interest in year 1, 320 days in year 2,..."
https://www.emoneyfacts.co.uk/news/savings-news.aspx?newsarticleid=203434

Loughton_Monkey

Length of remaining term at the time of withdrawal

1 year or less: 90 days loss of gross interest
Up to 2 years: 180 days loss of gross interest
....etc.

Do some calculations, and you find that these are very harsh penalties - to the point where you would not find it cost effective to take it out and move it except under the most extreme interest rate rises in a year or two.

Rollinghome

But is that n years from the start or end?

From the end.

As always, depends on your view of future interest rates. Might suit someone undecided between a 3 and 5 year fix and some flexibility is better than none. A withdrawal at 3 years would give an average of around 4.2% or so p.a. after the penalty.

Not as compelling as say the recent 4.3% 5 year fix from Northern Rock with no loss of interest if 180 days notice given - but no longer on offer. Effectively a 180 day notice account.

The_AA_Company_Representative

To help you to clarify this, I have copied the link for you as follows:
http://www.theaa.com/savings/internet-fixed-rate-savings-accounts-terms-and-conditions.html

alanq

Thanks for that. When I wrote that the "Ts&Cs are confusing" I was quoting from this brochure.
http://www.theaa.com/savings/aa-fixed-rate-savings-dec-2010.pdf