Unexpected interest rate reduction

Broadwood

stehouk wrote: »

would this be classed as a run on the society, if you all leave on the same day will be able to repay all the investors,

Probably yes. But the chances of it happening are negligible and the financial institutions know this. Inertia on the part of savers is the reason banks and building societies treat us with contempt.

A national savers union would be one step towards gaining realistic interest rates at least equal to the rate of inflation.

Mickygg

Broadwood wrote: »

I'm seriously looking at NS&I 3 year Guaranteed Growth Bonds.

They're paying 2.20 % for the 3 year bond and you can withdraw money if needed but with a 90 day interest penalty. So provided you kept your lump sum in for at least 8 months without any withdrawals you would be no worse off than leaving it in The Coventry at 1.35%. Leave it in NS&I for longer and it would be a gain over staying with The Coventry. That's assuming that rates don't rise again during the next 9 months (allowing 1 month for the notice period for switching - from today).

Anyone better than me with a calc who would like to check my rough figures?
I might have got them wrong.

I personally wouldn't go for Nsandi right now. A few months ago yes but interest rates may creep up a little so I'd be tempted to go for now either best instant access or fix for 1 year.

ValiantSon

Broadwood wrote: »

Probably yes. But the chances of it happening are negligible and the financial institutions know this. Inertia on the part of savers is the reason banks and building societies treat us with contempt.

Given the number of users on these forums and the required capitalisation of the society it is an incredibly unlikely event that it would cause a genuine run that would leave them unable to continue to operate. You are talking about a few hundred thousand pounds at most - pin money.

They aren't treating you with contempt they are operating a mutual society in a competitive marketplace.

Broadwood wrote: »

A national savers union would be one step towards gaining realistic interest rates at least equal to the rate of inflation.

How exactly would such a union work? The situation is not analagous to a group of workers seeking to exercise weight against an employer.

ValiantSon

Mickygg wrote: »

I personally wouldn't go for Nsandi right now. A few months ago yes but interest rates may creep up a little so I'd be tempted to go for now either best instant access or fix for 1 year.

If you wouldn't go for NS&I who are offering these rates with only a 90 day loss of interest for withdrawals, why would you consider a 1 year fixed rate savings bond where you can't withdraw at all? This makes no sense.

If you think rates are likely to go up within the next few months then the NS&I product gets you a good rate now and gives you flexibility to withdraw your money if something better comes along.

AirlieBird

Broadwood wrote: »

Mass ditch and switch from The Coventry to somewhere better ?

What date shall we do it ?

These are serious questions by the way.

Why? Aside from the Easy Access Savers and the 30 day Notice accounts, the other accounts are still competitive. The are only 3 nationally available easy access accounts paying more than 1.25%. One of those only pays 0.01% more, 1 isn't covered by the FSCS but the compensation scheme in another country, which is an issue for some, and the other is one that requires £750 to get the higher interest rate and for less than a year. . Even with the Easy Access Savers there isn't that much more choice.

Broadwood

AirlieBird wrote: »

Why? Aside from the Easy Access Savers and the 30 day Notice accounts, the other accounts are still competitive. The are only 3 nationally available easy access accounts paying more than 1.25%. One of those only pays 0.01% more, 1 isn't covered by the FSCS but the compensation scheme in another country, which is an issue for some, and the other is one that requires £750 to get the higher interest rate and for less than a year. . Even with the Easy Access Savers there isn't that much more choice.

You/ve been conditioned into their way of thinking.

Accounts might be competitive with other savings institutions but are nowhere near equal to inflation. One of the main reasons for saving spare cash in an institution as opposed to under the mattress is so that it retains its buying power.

Current savings rates are still losing rates in that respect.

Broadwood

ValiantSon wrote: »

Given the number of users on these forums and the required capitalisation of the society it is an incredibly unlikely event that it would cause a genuine run that would leave them unable to continue to operate. You are talking about a few hundred thousand pounds at most - pin money.

Your maths is suspect tbh. We're probably talking about many millions if not 10s of millions of £s.

There are 1.7 million forumites registered on here.
Probably quite a few thousands of them with money saved in The Coventry.
Maybe a few hundred maxed out for safety at £85k.
That's just a wild guess.

There might be many more than that.

ValiantSon

Broadwood wrote: »

You/ve been conditioned into their way of thinking.

Accounts might be competitive with other savings institutions but are nowhere near equal to inflation. One of the main reasons for saving spare cash in an institution as opposed to under the mattress is so that it retains its buying power.

Current savings rates are still losing rates in that respect.

Why do you think that rates should be at least equal to the rate of inflation? The market conditions set the rate. Higher inflation is a symptom of the wider economy and rates are low because of that wider economy.

Interest rates have never guaranteed to protect the buying power of your money. If at certain point they have that is because the economy at the time has facilitated a market where it was possible to offer such rates. The current position of the economy is that it cannot.

ValiantSon

Broadwood wrote: »

Your maths is suspect tbh. We're probably talking about many millions if not 10s of millions of £s.

There are 1.7 million forumites registered on here.
Probably quite a few thousands of them with money saved in The Coventry.
Maybe a few hundred maxed out for safety at £85k.
That's just a wild guess.

There might be many more than that.

Really? My maths is wrong? Please provide accurate equations to prove this point.

Number of registered users doesn't equal number of active users.

Even if quite a few thousand have savings with Coventry BS it is still unlikely that it would equate to more than hundreds of thousands of pounds. Even if 100 people had the maximum £85,000 saved with them the sum would still be below £10 million (and I suspect that isn't the case, anyway).

The society has 1.5 million saver members. I doubt very much that all of them use this forum. Also, given that a large number of forum users (based on their posts) are not high worth individuals the chance of them all having many tens of thousands of pounds saved with Coventry is pretty small. Furthermore, Coventry BS has assets of more than £42.5 billion and a net income of £243 million. Your plan would not cause a run leading to their financial downfall!

do163600

I had a similar letter about a Coventry Call-save account.

My mortgage rate has recently gone up, I don't know if the Coventry could do me a cheaper rate.