Is there any merit in keeping BS accounts?

altyfc

Sorry if this has been asked before.

My wife has circa £500 in a Leeds & Holbeck BS accouint. From what I can gather, it's earning a terrible 0.5% interest. She also has a Yorkshire BS account with a little in.

Is there any merit in 'hanging on' to accounts like these or have the days of pay-outs from BS mergers well and truly passed?

If the accounts should be kept open, how much should be kept in them? Or is it really a case of getting the money out and putting it somewhere where it earns a sensible level of interest.

Thanks for any help.

Robert_Sterling

The Leeds and Holbeck was allowed to change its name five years after the Halifax took over the Leeds Building Society.

The Former Leeds and Holbeck is now the Leeds Building Society.

Your wife should transfer £100 of her money to the Leeds 3 year fixed rate bond which pays 6% per annum.

.... and yes it it is reasonable to keep £100 in almost any Building Society lest there is a merger which might produce a windfall.

The charity rule does not apply to mergers.

altyfc

Robert_Sterling wrote: »

Your wife should transfer £100 of her money to the Leeds 3 year fixed rate bond which pays 6% per annum.

I'm sorry but I don't quite follow that... why? Why £100? Why this account as opposed to any of the other savings accounts out there? (Or are you just making a suggestion as to what she could do?) Please don't take this the wrong way... I'm just genuinely not sure that I understand.

Robert_Sterling wrote: »

.... and yes it it is reasonable to keep £100 in almost any Building Society lest there is a merger which might produce a windfall.

Hmmm... now I'm wondering if this relates to the previous statement. Were you saying that she should move £100 to this other account, and withdraw the remaining funds (and close the existing account)?

Also, is the sum of £100 what is widely recognised as to being the required sum that you need to keep in? Or can this not really be predicted?

Thanks, and sorry for the dumb questions.

tom188

In order to be a voting member who would be eligible for a windfall one needs to keep at least £100 in the account.

There is continued speculation regarding consolidation in the sector and therefore keeping at least £100 with each of the societies makes sense - in the event of a merger (and less likely demutualisation) the windfall would almost certainly be more than £100 leading to a good return.

Robert refers to Leeds 3 year fixed rate bond which pays 6% per annum, this account is the top payer that leeds offer so keeping your money in there would have the smallest opportunity cost, in fact this account is one of the best payers in the market at present.

YBS also offer similar high paying accounts, and through utilising these one would would maintain their membership rights without foregoing the interest your wife is currently losing through maintaining poor rate accounts.

altyfc

So, just to clarify... you are suggesting moving £100 from one account to another new account within each Building Society and - I assume - withdrawing the rest of the funds and putting them somewhere where the interest is more favourable... is that right? (I take it that would mean you would still be regarded as a loyal, long-term customer...)

One more question coming out from this is, if you don't mind... is it worth creating multiple additional BS accounts, each with £100 in... just in case? If that is worthwhile, how long are you likely to have to have £100 in such an account in order to benefit in the event of a merger?

Thank you again.

tom188

1. Yes keep at least £100 in the account, I suggest you transfer that into the best paying account. The destination for the rest of money will be a rate based decision (that is not to say that the building society does not in fact offer the most competitive rates).

2. You are only eligible to one windfall in the event of a demerger, so there is no benefit to having more than one account with a society in this respect. You could however open accounts with more societies if you wanted (I have accounts with 40). This rpoints board http://www.rpoints.com/bb/viewforum.php?f=12 contains a lot of information on the subject.

tom188

how long are you likely to have to have £100 in such an account in order to benefit in the event of a merger?

Oh and thats a crystal ball decision as all societies quote a commitment of mutuality, although there is wide speculation that the 60 or so current societies will dwindle to a handful over the coming years. However in general windfalls have been at least £200-£400 so potentially you could get a very good return on your money.

Robert_Sterling

altyfc wrote: »

I'm sorry but I don't quite follow that... why? Why £100? Why this account as opposed to any of the other savings accounts out there? (Or are you just making a suggestion as to what she could do?) Please don't take this the wrong way... I'm just genuinely not sure that I understand.



Hmmm... now I'm wondering if this relates to the previous statement. Were you saying that she should move £100 to this other account, and withdraw the remaining funds (and close the existing account)?

Also, is the sum of £100 what is widely recognised as to being the required sum that you need to keep in? Or can this not really be predicted?

Thanks, and sorry for the dumb questions.

YES you are correct in your assumptions

Robert_Sterling

altyfc wrote: »

So, just to clarify... you are suggesting moving £100 from one account to another new account within each Building Society and - I assume - withdrawing the rest of the funds and putting them somewhere where the interest is more favourable... is that right? (I take it that would mean you would still be regarded as a loyal, long-term customer...)

One more question coming out from this is, if you don't mind... is it worth creating multiple additional BS accounts, each with £100 in... just in case? If that is worthwhile, how long are you likely to have to have £100 in such an account in order to benefit in the event of a merger?

Thank you again.

Yes. £100 per adult member of the family per building society.
So with four family members over 18 years old and about sixty building societies you can target about 200 or more accounts. some family players in the merger mania game have over 100 accounts. Merger mania is the new carpetbagging but the charity clause does not apply to mergers.

altyfc

Wow... thanks for all the helpful feedback. I had no idea that it was this involved. I hope you don't mind me taking this a step further...

Let's suppose I had £10,000.

With this, I opened 100 BS accounts (ie. with different BSs) and put £100 in each.

What is my return from this likely to be in, say, 5 years time?

Is it likely to exceed putting £10k into a single, good savings account?

Thanks...

Robert_Sterling

In the 1990s I opened more than 150 B S accounts in the names of myself, my wife, each of my three over 18 years old children and an old aunt.

We got forty one windfalls worth a total of more than £55,000
The best by far was the Northern Rock where for £100 six times over we got 500 shares six times over i.e. 3000 shares.
The value of the 3000 shares today is £35,500
The windfall days are over.

Now the name of the game is Merger Mania.

In the year 2000 I saw that the game was over.
The family closed most of the remaining accounts.
One of the family was a bit dilatory in this matter.
As a result she has qualified for merger mania money from:-

Lambeth Portman
Universal Newcastle
and will from
Portman Nationwide.

Meanwhile in the past year we have taken an interest in opening a lot more accounts.

£100 will do per account.
Only one account with any one person with each building society.