B'ham Midshires 6.4% bond???

lolly5648

I have a bond maturing with BM and they have suggested I transfer the money into a new bond for one year at 6.40%.

I wont need the money - the rate seems good but so did the BM rate a year ago and now its laughable!

Should I invest for 1 year into a fixed rate or put the money in a flexible rate account in case interest rates increase a couple of times?

debbie42

Are you a tax payer, and have you used this years ISA allowance yet?

General market sentiment appears to be that interest rates will rise, but by how much etc. who knows?

lolly5648

Thanks Debbie

Yes, I have used this year's ISA allowance. I know that no-one knows how much interest rates will rise but I just wanted to know if people thought I should take a one year fix

bristolleedsfan

lolly5648 wrote: »

Thanks Debbie

Yes, I have used this year's ISA allowance. I know that no-one knows how much interest rates will rise but I just wanted to know if people thought I should take a one year fix

it really depends on how much the value of the lump sum is u are talking about fixing, so u can calculate what difference possible an xtra 0.25% or 0.50% gross might make to your savings were u to hang on

u need to consider

how much interest ill u be earning in interim period while u wait and c when interest rates might peak against taking the 6.4% now

how much would u lose in interest moving the money about, against losing no interest in transit if u take birmingham midshires 6.4% fix

KingKenny

Year Fixed Rate Bond - Annual Interest Rate
£1 minimum investment Access not permitted for term Annual interest rate
Gross/AER: 6.40%
Net: 5.12%


1 Year Fixed Rate Bond - Monthly Interest Rate
£1 minimum investment Access not permitted for term Monthly interest rate
Gross p.a: 6.22%
Net: 4.98%
AER: 6.40%


1) Do they pay interest on BACS payments into this account on the day after it is recieved into your account, i.e. the fourth working day! or the third day?

2) Do they pay interest on CHAPS payments into this account on the day after it is recieved into your account, i.e. the second working day! or the same day?

3) On maturity, do they allow CHAPS payments to withdraw your funds, or can you only make, a cash, cheque, or BACS withdrawal.


I do not know what the Midshires rules are in relation the the above points, Please any feedback? Thanks:beer:

Old_Slaphead

KingKenny wrote: »

Year Fixed Rate Bond - Annual Interest Rate
£1 minimum investment Access not permitted for term Annual interest rate
Gross/AER: 6.40%
Net: 5.12%


1 Year Fixed Rate Bond - Monthly Interest Rate
£1 minimum investment Access not permitted for term Monthly interest rate
Gross p.a: 6.22%
Net: 4.98%
AER: 6.40%


1) Do they pay interest on BACS payments into this account on the day after it is recieved into your account, i.e. the fourth working day! or the third day?

2) Do they pay interest on CHAPS payments into this account on the day after it is recieved into your account, i.e. the second working day! or the same day?

3) On maturity, do they allow CHAPS payments to withdraw your funds, or can you only make, a cash, cheque, or BACS withdrawal.


I do not know what the Midshires rules are in relation the the above points, Please any feedback? Thanks:beer:

On (3) they (at least they used to) always repay by chq. This invariably took 2 or 3 days min. to arrive - thereby losing between 1-2 weeks interest at the end of the Bond

nilrem_2

lolly5648 wrote: »

Should I invest for 1 year into a fixed rate or put the money in a flexible rate account in case interest rates increase a couple of times?

I had exactly the same situation with BM when one my 3yr bond matured with them back in May, I re invested with them and it has gone up a little since then but I don't worry about it.

If I was in your shoes I would just re invest it back with them in the bond they offer, it is a very good rate and it's a hassle free way to solve the problem, it is quite possible that interest rates may rise again but I doubt it will be comparable to the difference between your maturing bond and the new offer. any increases that you gain by moving the cash or waiting for a higher rate will be lost by the interest you lose in shifting or waiting, I would take the easy way and leave it with BM.

KingKenny

Old_Slaphead wrote: »

On (3) they (at least they used to) always repay by chq. This invariably took 2 or 3 days min. to arrive - thereby losing between 1-2 weeks interest at the end of the Bond

Be interested to know whether that is still in place, if it is, would not touch the product to be honest.:eek:

nilrem_2

they (at least they used to) always repay by chq. This invariably took 2 or 3 days min. to arrive - thereby losing between 1-2 weeks interest at the end of the Bond

KingKenny wrote: »

Be interested to know whether that is still in place, if it is, would not touch the product to be honest.:eek:

That is a valid point if one intends to invest for just one year then withdraw the funds, but many of us do often keep bonds for many years reinvesting in a replacement with the same savings institution when a bond matures , this way the lost of interest caused by repayment by cheque does not have such a big impact on interest loss and who knows they may change the way they pay out in future.

bristolleedsfan

Old_Slaphead wrote: »

On (3) they (at least they used to) always repay by chq. This invariably took 2 or 3 days min. to arrive - thereby losing between 1-2 weeks interest at the end of the Bond

when ever im withdrawing by post i always ensure that i give instructions for the withdrawal transaction to be transacted and posted on "a monday" so ideally i receive cheque on a tuesday to minimise loss of interest, as long as the organisation has had the instruction in advance of " a monday" it has no excuse not to transact and post out on " a monday" :cool:

Old_Slaphead

bristolleedsfan wrote: »

when ever im withdrawing by post i always ensure that i give instructions for the withdrawal transaction to be transacted and posted on "a monday" so ideally i receive cheque on a tuesday to minimise loss of interest, as long as the organisation has had the instruction in advance of " a monday" it has no excuse not to transact and post out on " a monday" :cool:

When a FRB matures I assume you can't just say 'well leave repayment for another few days until next Monday'. Presumably they have a system in place to issue all chqs within (usually stipulated) 5 days of end on Bond (with interest added). I've found that most FRBs usually mature on Wednesday/Thursday. Most post doesn't now get delivered particularly early meaning that anyone who goes to work usually misses out on another day's interest. At best with Birm Mids I've lost around a week's interest - at worst nearly 2 weeks.....this compares to 2 or 3 days with BACS users.

For that reason I don't use BM's 1 year FRB anymore