M&S fixed rate savings works like easy access account

rated

If you are looking to stash some cash temporarily check out the m&s fixed rate products. Unlike most products the break fees are super low e.g. A fixed 100 GBP with no loss of interest on the 3yr 3.5% product. Some competitors will charge a whole years worth of interest for an early redemption.

For example, if you invest 100k and break the 3yr product after just 1 year you lose the equivalent of 10 days interest and effectively reap 3.4% for the year. Why bother with an easy access account paying 2.x%?

Downside of course is that you need to withdraw the whole amount and cannot add to your savings, might be suitable for some folks though.

--update

I've just run the numbers and for 50k savings it makes sense to buy the 3yr for any saving period over 4 months; for 100k savings any period over 2 months. In both cases the EAR works out to over 2.8% which is the rate at the top of the easy access chart at time of writing (Halifax). Beyond these (very short time periods) you end up making well above the easy access returns.

SavingFish

Funny, I spotted this just yesterday and was meaning to post.

There are a couple of points which affect the calculation ever so slightly - For example, I suspect the £100 is deducted after tax, so your income tax band affects the numbers slightly, but it's incredibly minor.

I think the M&S website says that they will be introducing a new bond issue on the 25th of October and that this issue will be closing shortly.

2010

30. WITHDRAWALS
30.1. Subject to 30.4 below, on your instructions you can make a full withdrawal of
any Fixed Rate Bond held to occur within a timescale you stipulate. Partial
withdrawals from a Fixed Rate Bond are not permitted.
30.2. Withdrawals, except those made on or after the Maturity Date, will be subject
to the following charges:
30.3. Interest calculated up to and including the date we receive your instructions
to withdraw will be credited to your bond.
30.4. The charges outlined in 30.2 above will be deducted from the final interest
credited to the Fixed Rate Bond on withdrawal and if this is not sufficient,
from the amount deposited.

1 year is £50, 2 year is £75 and the 3 year is £100 penalty.

Well spotted OP.
These accounts can only be funded by cheque or debit card.
Does anyone know how much you can pay by debit card and how long it takes?

evenasus

2010 wrote: »

30.
These accounts can only be funded by cheque or debit card.
Does anyone know how much you can pay by debit card and how long it takes?

You can deposit £50K by debit card.

I gave up and put the phone down a few minutes ago, having listened to their 'sorry to keep you waiting' message for over 10 minutes. Doesn't give me much confidence re their customer services.

I might try again in half an hour.

parcival

Been trying to get through for 2 days. Clearly M & S are understaffed - service not what it was.....

rated

So I just chowed down on my own dogfood and put the proceeds from the sale of my house (just sold, renting while looking for a suitable property) in the 3yr bond.

Got through after 50 mins on hold, account setup took 5 mins, needed a CHAPS xfer an amount over 50k.

Clearly I'm concentrating my risk in a single institution here but I don't anticipate being here for long and I feel pretty safe with the M&S brand.

2010

I too gave up on the phone after 20 minutes.

I wanted to know if you could open a joint account.
How much is the limit of a debit card transfer (thanks evenasus)
And how long the debit card transfer takes.

2010

rated wrote: »

Got through after 50 mins on hold, account setup took 5 mins, needed a CHAPS xfer an amount over 50k.

I thought you could only fund it by cheque or debit card according to their T&C.

rated

2010 wrote: »

I thought you could only fund it by cheque or debit card according to their T&C.

They specifically asked me for CHAPS due to the size of the deposit. Made sense in my case - interest which would be forgone while the cheque was in the post offsets the cost of the CHAPS xfer.

SavingFish

2010 wrote: »

I too gave up on the phone after 20 minutes.

I wanted to know if you could open a joint account.
How much is the limit of a debit card transfer (thanks evenasus)
And how long the debit card transfer takes.

Unfortunatey, from the Terms and conditions:
"3.2 All Fixed Rate Bonds must be held in a single name. Fixed Rate Bonds held in joint names are not permitted."

So you'd be looking at separate accounts and double the break fees. (On the plus side this gives you the flexibility to withdraw just half the cash early if you need to). It could still be worth it for a really big deposit though, especially if the combined fscs protection is important to you.

opinions4u

Downside of course is that you need to withdraw the whole amount and cannot add to your savings, might be suitable for some folks though.

A rather significant difference to an easy access account.