Abbey Fixed Rate Monthly Saver 6.5%

isasmurf

Abbey have launched a regular savings account similar to the one that Halifax launched earlier this year.
This one pays 6.5% interest. Save a fixed amount between £20 and £500 for a year. At the end of the year it becomes a monthly saver. If you miss a payment or withdraw from the account you get no interest for that month and the account becomes a monthly saver. They say it's a strictly limited offer.

Abbey Fixed Rate Monthly Saver

sergeant121

You'd have to be careful to keep your eye on the ball with this one because, if you miss a payment or if you withdraw from your account, you will receive zero interest for that month and the account will then become a Monthly Saver.  In any case, the account will automatically become a Monthly Saver account on the 1st of the month of the anniversary of opening.

On the 1st of the month of the anniversary of opening or if you fall foul of those other T&Cs, the 6.5% gross interest drops to a disgraceful 1.25%.

Kazza242

Great offering by the Abbey. I read about this account in today's Money Mail.

I agree with Heinz, this account is not for the forgetful or unorganised. Make any mistakes and you will be heavily penalised.

Another thing to remember is that once you have chosen the monthly sum you wish to credit to your account (via standing order) this cannot be changed. So those hoping to increase or decrease their payments through the account year will be restricted from doing so. Think very carefully at the outset when deciding how much you'll be able to afford per month or you'll lose out.

System

Ok if i set up a standing order for £20 a month, and i missed a payment or whatever is there anything stopping me drawing my money out to invest elsewhere? What do you think?

Kazza242

No payment breaks are permitted during the first 12 months.  If you don't credit the account in any given month during the fixed term, the account will automatically change to a Monthly saver account.  

At the end of the 12 months you will receive the 5.2% (6.5%) until the end of the month before the missed payment, zero interest for the month of the missed payment and the Monthly Saver interest for the remainder of the account year.  If you close the account, you will be hit with 30 days' loss of interest.

Kazza242

Judi - After making an initial opening deposit, this account requires a standing order is setup to credit the account (on or before the 21st) of each month.  Using a standing order should ensure that you don't miss a payment.

If you do miss a payment, then this account will penalise you heavily.  If savers can stick to the terms rigidly for the first year, then I think this account is worth it.  No other regular saver is offering 6.5% ;D.

System

hmmmmm

Daft_Monkey

It looks good at first, but is not that good after all...The reason being, the 30 day loss of interest if the account is closed.
Assuming that we put the maximum of £500 each month into the account, we will accumulate about £145 of interest.
Now a 30 day loss of interest on the final amount could be up to £26. Giving us a net return of about £119.
The same amount invested in the cahoot 5.65% savings account will return about £125, making it a better investment.... I think... :-/

home_alone

After saving with the Abbey for over 20 years I left them this year for ING, I had loads of problems with them on getting my cash out, you can read about it on the "Vent your anger" thread Abbey Postal Account, their customer sevices try hard but one hand does not know what the other hand is doing, get my drift, also I was fed wrong information that cost me loads of lost interest.

gary

home_alone

As an afterthought, there are many types of saver, those that chase todays highest interest rate, those that will not move whatever the rate they are receiving, those that use a little bit of caution and wait to see what forums like this say about the various companies then weigh up the pros and cons,--- its best to be the last type less stressful.

Is this not the greatest forum ever?

Milarky

Well I note that you can pay £500 immediately and then revert to £20 regular payment by standing order... So you could set aside some money into this account and get a better 'average' rate by this means.

For those contemplating savings the same regular amount each month, I work out the interest payable would therefore be equivalent to about 2.6% of the total invested.

The maximum interest (based on £500 per month) would be 5.2% of the average annual balance of (say) £3000. That's about £156.

[I've worked it out as follows, if interested...]

Assuming account is opened on 15 September with £500 and interest is paid on the 1st Septmeber 2005 [351 days] and subsequent payments are made on 1st October, .. November .. [etc] this would be more like

£500 * 5.2% * (351/365) = £25.00  on the first payment.

Then £500 *  5.2% * 11 * (66/144) = £131.08 on the remaining 11 payments.

5.2% is just 6.5% less 20% for basic rate taxpayers...
66/144 comes from '11+10+9...+3+2+1'=66, which represents the sum of numbers of 'whole' months for all the regular payments combined, and 144 comes in because there are 12 months in the year, and each payment is just a 12th of the whole. Hence 144 = 12 x 12