Closing to open at higher rate?

rosalinda88

I have a BM Savings Online Extra (Issue 17) and Virgin Defined Access Saver (Issue 1) account. Both have recently put out newer issues that are 0.1% higher.

It is annoying existing customers do not benefit from rate increases on essentially the same thing because banks put out as "different" issue.

Can I close my accounts and open again? Will there be problems in doing this?

bowlhead99

rosalinda88 wrote: »

I have a BM Savings Online Extra (Issue 17) and Virgin Defined Access Saver (Issue 1) account. Both have recently put out newer issues that are 0.1% higher.

It is annoying existing customers do not benefit from rate increases on essentially the same thing because banks put out as "different" issue.

Banks create limited issue accounts to allow them to accept deposits at the most competitive rate that they can from time to time.

If they allowed their limited rate to apply to an unlimited amount of deposits from an unlimited amount of people, they would have to offer a lower rate - otherwise if the prevailing market rate fell, it could become very expensive (relatively) to keep giving the old high rate to millions of pounds of deposits, they could end up paying way higher costs than their rivals and go out of business.

Similarly, if they offer to take people in at these high rates and guarantee to automatically tick those rates up even higher if higher rates become available in the market, they are effectively locking themselves in to always paying the highest rates available in the market to all customers who come to their door.

So, it stands to reason that that will cut off new issues at a certain level and not automatically and voluntarily increase those rates if the customers don't request it. If they did, they would not make much profit and businesses that don't make much profit can't afford to keep giving you nice rates.

Can I close my accounts and open again? Will there be problems in doing this?

Yes to the first (you can close) and No to the second(you can re-open); your accounts are instant access so you can get your money as long as you keep within the terms and conditions of the account, which presumably you have. Once you have your money, there is no issue depositing it in the best accounts available from those institutions (or others, for that matter).

xylophone

Can I close my accounts and open again? Will there be problems in doing this?

The process might be more trouble than it's worth?

I began the process of opening one of these accounts nearly three weeks ago and have yet to receive all the information necessary to enable me to access the account...... to close and then start all over again?:eek: Too much to bear....

rosalinda88

bowlhead, funny how it doesn't work the other way with rate drops.

xylo, must be BM. Am I right? By the time you open, they'll be on another issue.

xylophone

xylo, must be BM. Am I right?

Only too right, I fear......

bowlhead99

rosalinda88 wrote: »

bowlhead, funny how it doesn't work the other way with rate drops.

If you want to commit to a specific amount of time that they can keep your money, you can get them to commit to a specific rate that they'll give you for that time period (e.g. 1 year, 3 years etc). It won't drop.

If you want to NOT do that, because you prefer to be able to pull your money out and spend it - or go and find something else better if market conditions change, causing them to abandon whatever they were doing with your money and scramble around to pay you back... you will find yourself facing offers of 'variable' rates.

They can, and should, certainly reduce the rate if they can no longer effectively use the money for the cost that they're paying you, just like you can take the money back if you don't think what they're paying you is as good as the other things you can do with the money.

Without that freedom on both sides, you would be reluctant to put your business with them and they would be reluctant to take you on as a customer. If you're happy to commit without the freedoms, simply go for an agreed fixed rate; there are plenty about, at over the 1.6% available from the accounts you're looking at.

robatwork

Can I ask how much you have in these accounts?

I ask because only if you have substantial sums would the 0.1% be worth the hassle. For example 0.1% of £10,000 is £10.

Chris2000

rosalinda88 wrote: »

Can I close my accounts and open again? Will there be problems in doing this?

With BM, do it the opposite way round: Open the new account before closing the old one, logging in at the appropriate point. That way the new account will open immediately and the first deposit does not have to be paid in by cheque (even though the account conditions and the application process say it does, that seems to be only for new customers as part of the ID checks).

In my experience, once the new account is open you can pay in by Faster Payment without waiting for the first direct debit to go through and the 12 month bonus interest rate starts from the date of the first deposit.

The account conditions state a maximum of one Account per depositor, but the word "Account" is defined in the opening sentence as Online Extra Issue 18 i.e. you can have one Online Extra account from each issue, not just one Online Extra account overall.

Aretnap

rosalinda88 wrote: »

bowlhead, funny how it doesn't work the other way with rate drops.

Sometimes it does. About three years ago I opened a 30 day notice cash ISA with Coventry BS paying 2.75% interest. Rates dropped across the board since then - but I kept my 2.75% long after such rates had disappeared from new accounts. They finally dropped it a couple of months ago to (I think) 2.35%, which is still better than any new account with similar terms that I could open today.

psychic_teabag

For BM, you can just phone them and ask them to upgrade your existing account to the latest model.