New Fixed Term Deposit Accounts from Yorkshire Bank

nad1611

Okay.Thanks for that Ifts.So simply, the interest is added to the Capital? I just choose whether that's yearly or at Maturity.
I wouldn't be paying any Tax on my interest anyway, so apart from not having to open an account with them and the Tax position. Is there any advantage to one option over another between these 2 options seen in your link?

https://help.eu.nabgroupdirect.com/s...RTICLE_ID=2091

Thanks again for your help.

Ifts

nad1611 - If it does not matter to you when you receive your interest (annually or at maturity) then no it wont matter which option you go for.

Don't want to complicate matters but Shawbrook bank have got some fixed term bonds, mentioned in this thread:
https://forums.moneysavingexpert.com/discussion/3688953=

Advantage of the Shawbrook offerings over the YB ones is that they will return your money at maturity via electronic payment to any bank, this will save you waiting for a cheque from Yorkshire Bank if you have not got another account with them. Although the YB fixed term deposits can be opened via post, to open an account with them you will have to go in to one of their branches (I was told this when I phoned YB yesterday), which may not be suitable to those who don't live near to a branch.

If I was choosing between the YB or Shawbrook bank, I would now choose Shawbrook bank, mainly because how they return your money to you when your fixed term bond matures.

TCA

nad1611 wrote: »

Okay.Thanks for that Ifts. So simply, the interest is added to the Capital? I just choose whether that's yearly or at Maturity.

This still confuses the hell out of me. When looking at the 5 year options with Clydesdale Bank for interest added to the account, the interest summary page is pretty clear:

1) Interest capitalised and paid at maturity – interest will be credited to the account on the maturity date or,

2) Annually capitalised interest – the interest is added to your Term Deposit account on the anniversary every year.

But when you get to the application form the terminology changes:

A) Interest capitalised at maturity or,

Interest capitalised annually and paid at maturity.

The very last bit there in saying "paid at maturity" is misleading to me, as I would imagine that both are paid at maturity. I'm presuming that equates to 2) then?

ScarletBea

Yes, they're both the same.
I've opened 2 accounts, both directly at branch (much easier and quicker), and when the lady asks that question I always say "well, it's exactly the same result" and she has to admit that yes, it is.

TCA

ScarletBea wrote: »

Yes, they're both the same.
I've opened 2 accounts, both directly at branch (much easier and quicker), and when the lady asks that question I always say "well, it's exactly the same result" and she has to admit that yes, it is.

The difference between the options is that although interest is capitalised in both, it is added to the account annually in one option, whereas you get the 5 year interest hit for tax purposes in one go with the maturity option.

I find the terms used on the application form confusing but it's pretty clear on the website. At least it was clear after I asked on here!

With the branch application, do you actually leave with your account open if you take in the relevant i.d with your application form and cheque? Presumably you don't need certified documents if the branch staff are viewing originals?

nad1611

Just one last question in addition to the above, I would be in the paying 10% on my savings category if paying annually,as my other income is below my Personal Allowance.

However if I chose to go for the interest added annually and paid at maturity, how would it work for Tax purposes.

Would the accumulated interest over the 5 years be worked out against the Tax Allowance for that particular year in 2017 for example?

Ifts

nad1611 wrote: »

However if I chose to go for the interest added annually and paid at maturity, how would it work for Tax purposes.

If you go for the 'interest added annually and paid at maturity' option then tax is due when the interest is added/credited to the account.

Would the accumulated interest over the 5 years be worked out against the Tax Allowance for that particular year in 2017 for example?

No, tax is due when the interest is added/credited to the account.

MoneySavingUser

Got my certificate!

Balls_2

It is not clear to me that the slightly better than elsewhere interest rate outweighs the apparent encumbrances around the product, as to account opening, and particularly as to repayment on maturity. These appear to include as follows:


1. Although it is possible to fill an application form online and print it then post it (but, I am told, only after first waiting for a pre-printed envelope from the bank), instead of applying in branch, on further study this does not appear to be a “direct savings” type product, as:

(a) Opening. The "Personal Information" terms contain an absolute disclaimer of the bank’s liability (see the part headed "Term deposit disclaimer") for any loss resulting from transmission of personal information over the internet, notwithstanding that the process is via an https (secure socket layer) connection provided by the bank. Therefore for security reasons the deposit is best set up in branch.


(b) Maturity. The only way to get an electronic repayment on maturity is to have another account with the bank to receive the repayment (which the terms and conditions (“T&Cs”) call a “Repayment Account”), and instruct an electronic payment away from that. The Repayment Account must be set up in branch (as a basic current account, as a minimum) and the T&Cs and other information provided show that the other account must be opened at the same time as the fixed term deposit, not later.

2. Although the definition of a Repayment Account indicates that on maturity there will be repayment to that account, this is only a definition, and the body of the T&Cs show that in fact the money will be rolled-over to a new term deposit of the same duration unless instructions are given to the contrary. I am told it is not possible to give that instruction at the outset and have a “marker” placed on the term account, and that the instruction can only be given in the window of opportunity given by the bank before the maturity date (which is 5 weeks according the terms and conditions but 3 weeks according to the FAQ, but less 5 days or more because the instruction must be given at least 5 days before the maturity date, however apparently there is a 14 day cancellation period).

4. The maturity FAQ indicate that in order to get repayment, maturity paperwork issued by the bank before maturity and must be returned.

5. If repayment is instructed, but a Repayment Account was not set up, according to its maturity FAQ the bank “aims” to issue the repayment cheque within 5 business days of maturity.

Interestingly, I am told that the automatic roll-over (unless otherwise instructed) of the deposit at maturity into a new fixed term of same duration is similar to the practice which has developed with renewal of insurance policies. There has been a merging of bank and insurance institutions over the years, so perhaps Clydesdale / Yorkshire banks are more at the insurance end of things. They do seem to offer numbers of insurance products.

This all may lead one to ask the question: whose money is it, exactly?

Allied Irish, Shawbrook, and BM do not seem to have these encumbrances on account opening, or on access to the capital at maturity. I am told Allied Irish make repayment via Swift so that the capital is back in the investor’s nominated account on the maturity date in cleared funds, and Shawbrook offers repayment via BACS, however BM does repay by cheque.

nad1611

Just a quick query on this, I sent off my application some three weeks ago and have received my certificate today, but am a little disappointed to see that the original Gross Interest of 5.16% is now 4.7%. That's actually lower than the 4.92% Gross they're offering on their 5 year Fixed rate now. How can that be.

I presume someone's going to tell me that they can change this at any time, but surely if you've already started the application process, you're applying for a certain % and if they were going to drop the rate then surely I should have dropped down to the new rate as above.
Would appreciate some clarification on this.

I gave them a ring in the interval, I was asked if I had asked to be paid my interest monthly or annually, I said I'm pretty sure that wasn't an option anyway, just the options which have been discussed on this thread before. To be honest I can't remember which one I plumped for the Annually Capatilised Interest or Interest Capitilised and "repaid" at Maturity because it didn't matter to me eitherway, but would either option explain the seemingly lowered interest rate and what implication does the "repaid" bit have. I thought I'd understood those definitions but obviously not.