Cahoot 1 year savings bond -explanation?

roy1954_2

This fixed rate savings account advertises a rate of 3.6%
However, when you investigate, it transpires there is a fixed delay before you can start operating the account and start earning interest. When I looked at this account last week, the earliest date you could start was 1 July 2012, now looking again today the earliest date is 1 August 2012.

This seems a rather odd arrangement as any other savings account enables you to pay in and start earning interest immediately.

Has anyone else seen this or opened an account - or am I missing something??

littlemoney

I was thinking of this account myself this evening and hadn't spotted this.

Where did you see this small print as I can't see it If this is the case I would be interested to know if you don't start earning interest till 1 Aug, what happens to the money and interest before then.

opinions4u

Page 23 of the terms and conditions suggests otherwise. Looks like a 14 month tm deposit to me!

http://www.cahoot.com/terms/pdf/terms.pdf


Interest is fixed at the rate of 3.60% gross/AER and will accrue daily on the deposit from the date that the monies comprising the deposit are credited to the account, up to the maturity date. The AER assumes that the deposit was invested on 1 August 2012.
Any interest added to the account may not be withdrawn before the maturity date.

The maturity date, 1 August 2013.
However, interest will not be payable:
i) where the balance in the account is less than the minimum deposit; or
ii) on any account exceeding a balance of £2,200,000. (Although the maximum capital deposit is £2 million, a buffer of £200,000 will apply for interest purposes.)
Upon the maturity date, the cahoot 1 year fixed rate bond (issue 4) and all funds (including interest) will transfer to an instant access cahoot savings account. This will be an annual interest account. We will notify you by email before the maturity date. Access to your funds in the account relating to the cahoot fixed rate bond will be available from the day after the maturity date.

buffman

I invested in an earlier version of this bond. You receive the full 3.6% as soon as £25k is deposited (i.e. for about 14 months). A genenerous feature of this account is that you can keep adding to the bond until 1 August 2012. This enables you to wait to see whether anything better comes along from other providers up to that date before making further deposits. My experience to date with Cahoot has been excellent.

pqrdef

If you invest on June 1st, you get 14 months at 3.6% gross. This works out at about 3.58% AER. The difference is because no interest is credited before maturity, so there's no compounding.

In principle, if you delay paying in the money, you get a slightly higher AER. This isn't useful unless you've got a better hole for the money. But it does mean that when they quote the AER they have to cite the starting date that they base the calculation on.

AERs aren't as simple as they've always been made out to be. They fall apart when the same interest rate isn't maintained indefinitely.

buffman

This is the best one year fixed rate bond currently on the market. It is possible to open the bond with zero balance and only fund it at the end of July (min balance £25k). This gives the saver nearly a two month 'free option'. If a better alternative comes along, the saver's personal circunstances change, or the intererst rate landscape changes, the saver simply does not fund the bond and, in effect, it is not opened. Opening the bond simply reserves the 3.60% rate for the saver if he/she wishes to take it. If the saver instead wishes to fund the bond immediately, he/she will receive 3.6% from when Cahoot receive the money. In addition it is possible to add to the bond anytime up to the end of July.