MSE News: Post Office cuts rates, but only tells savers after

Wendybytheriver

Well, the Post Office has now gone down in my list of "trusted" organisations, not at all happy with being told AFTER the interest drop, so I've voted with my feet.
Like other forumites, I only had my email on 23rd Jan - myself & DH opened Issue 5 accounts last June on monthly interest for our "day-to day savings". I was due to move the funds soon anyway, I always re-shuffle everything in the new tax year.
The latest monthly interest was credited on 1st Feb, so this morning I moved the balances out & have written to close the accounts. I've just spread the P.O. savings money around, topping up our ISAs to the max and topping up various other savings accounts - roll on 5th April & we just have to hope there's some decent savings on offer by then.

SnowMan

Rate now going down on 25th February 2013 see here.

So the e-saver 5 for example goes down from 3.17% AER to 2.67% AER

SteveG321

Am I being a numpty here? I opened an I 5 account in June 2012 with an interest rate of 3.17% This rate included a bonus of 1.52%. The paperwork indicated that the rate of 3.17% aka the initial rate was payable for the first twelve months. I have received today an email telling me that the variable bit will drop from 1.65% to 1.15% with effect from 25 Feb. Surely if the initial rate is payable for 12 months, no reduction can be made until June 2013?

innovate

The only thing guaranteed is the bonus (1.52%). The base rate was always variable

SteveG321

Innovate many thanks for responding. I have copied and pasted below the original documentaion for the features and rates for I5: My highlighting in green. In your view, what is the initial rate to which they refer?

Rate Type variable The type of interest rate is variable. Headline Interest Rate 3.17% The headline interest rate is 3.17% AER. Headline Interest Balance£1£1.00 Rate Tiers see details
Gross Rate Gross Rate AERAER Excl Intro Bonus Incl Intro BonusExcl Intro BonusIncl Intro Bonus £1 1.65% 3.17%1.65%3.17% ...
Gross Rate Gross Rate AERAER Excl Intro Bonus Incl Intro BonusExcl Intro BonusIncl Intro Bonus £1 1.65% 3.17%1.65%3.17%
Tax Free no This account is not tax free. Interest Payment Frequency choice Interest is paid annually or interest is paid monthly. Open-Ended Bonus 0% No open-ended bonus payable. Initial Rate Duration 12 months The initial interest rate is payable for 12 months. Number of Rate Steps 1 Number of rate steps is 1.

There is a link to the document but as a newbie I cannot post it

innovate

SteveG321 wrote: »

The type of interest rate is variable

I can see how you could think the 3.17% is guaranteed but it is not, because it says the rate is variable.

A good indicator, without examining the T&Cs, is whether you are allowed to make multiple deposits, and multiple withdrawals (which you can with the PO Online saver). You will be hard pressed to find any guaranteed rates on such instant access accounts.

For guaranteed rates, you are usually only allowed to make one or two payments, and you must usually lock your money away for a minimum term. None of this applied to the PO Online Saver.

But anyway, the T&Cs say the rate is variable, so they are entirely within their rights to drop the rate (after giving half-decent notice)

SteveG321

Thanks innovate. In which case I think it is misleading. I completely understand that the rate is variable on the account and my expectation would be that at the end of 12 months if I was daft enough to keep the money in the account it would fall to next to nothing. I am intrigued to know however if it is not what I thought it was, what is the initial rate duration in the T&Cs referring to. It has to be there for some reason!

I think I might ask the Post Office to explain why it is there and what it means.

innovate

SteveG321 wrote: »

There is a link to the document but as a newbie I cannot post it

just insert a few blanks into the link and post it

SteveG321

money.co.uk/savings-accounts/savings-account-details/Post-Office/Online-Saver-Issue-5.htm

innovate

ah right, that explains a lot. This is money.co.uk's interpretation of what the account is about.

Never rely on a third party (not even MSE!) for the exact terms - only the provider's T&Cs are valid. I don't think there is such a thing as an "initial" rate in the PO T&Cs.

I can't lay my hands on the Issue 5 T&Cs on the quick, but the Issue 9 ones won't be vastly different. http://www.postoffice.co.uk/sites/default/files/56353_PO_OnlineSaver_Issue%204%20v1.pdf