MSE News: Santander to pay interest upfront but is it a good deal?

edited 3 November 2011 at 11:48AM in Savings & Investments
33 replies 5.4K views
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  • seggy1seggy1 Forumite
    95 Posts
    well dont be bloody fooled you have to put the £1000 in a lower interest account lol
    Not quite.

    The £10,000 investment has still only earned 3.36% AER (£834 net interest for basic-rate taxpayers) compared with 4.3% AER (£1,077 net after 3 years) available elsewhere. So your £834 up-front interest would need to earn £243 net (i.e. £1,077 - £834) in three years to break even. I make that around 11.1% AER (gross) needed on the £834 to achieve that. I don't think it is very likely to consistently get that rate, or anything close, over the next three years without a considerably greater risk attached.

    Tax considerations aside, I would say this offer is more of a gimmick than anything of substance. But the uninformed will be taken in, so it's worth the bank's while to push it.

    Anyone care to check my numbers?
  • Gordon_the_MoronGordon_the_Moron Forumite
    1.5K Posts
    Part of the Furniture 1,000 Posts Combo Breaker
    ✭✭✭
    I read the account's terms and it says no withdrawals or closure early allowed, an account may be closed in the event of the death of an account holder.

    If I opened the account (I won't be !) got my interest on Dec 1st and got run over by a bus on Dec 2nd what happens? The account can be closed but can Santander claim the interest back?
    If you don't like what I say slap me around with a large trout and PM me to tell me why.

    If you do like it please hit the thanks button.
  • msaukmsauk Forumite
    32 Posts
    Tenth Anniversary 10 Posts Combo Breaker
    hermante wrote: »
    so you'll need to borrow some money for 2 weeks, or miss out.

    I took hermante's advice and telephone Santander earlier this afternoon. I was anticipating awkward and difficult customer service, having tuned into others' comments. But perhaps I was needlessly apprehensive as the gentleman I was put through to (he was in Belfast) was rather helpful, saying I would need to open a current account first and then open an upfront interest bond. He then managed to verify my 'credentials' online (perhaps my having another santander online esaver helped?) and after about 30mins, both accounts were opened.

    Maybe standards will slip from here on - we'll see. :undecided

    Suffice to say, after the call, I was able to access my new current account online. The bond has to be managed by phone or post. He was able to open this upfront interest bond for me, without my depositing any funds in it yet. He was happy to call me this time next week to arrange a deposit.
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