Interest on closing savings account early

ah93

Hi All,

I cannot find the answer to this anywhere, i have even called my bank and they couldn't tell me the answer, so I'm hoping someone on here can....

I have a savings account with an annual interest rate of 1.01% and can only make 3 withdrawals a year, otherwise the interest rate goes down to 0.10%.

I am needing to make my third withdrawal (possible closure) due to needing a house deposit. In order to get the 1.01% interest rate, I am considering closing the account. As I will be closing this before March 2019 (when the annual interest is paid in), how much interest will I get, as I am aware it won't be the 1.01% rate due to early closure? I won't be paid early closure fees either.

Please can someone help?

Terry_Towelling

Can only answer from a general point of view because the T&Cs of your product are not known to me.

Normally, interest is calculated on a daily basis and then added monthly, annually or at closure. If you have been accruing interest at 1.01% so far then that should be safe.

If you are allowed 3 withdrawals your rate will presumably not drop to 0.10% until you make your 4th withdrawal and that lower rate will only apply to the amount on deposit from that point onwards.

You still need to refer to the T&Cs (and I don't believe the bank didn't know the answer) just in case your provider is one that might apply the reduced rate to the entire balance retrospectively (which, I suspect is what you fear) - but I doubt it.

Frankly, the rate is poor anyway. Marcus will give you 1.5% (paid monthly) with no restrictions and Virgin's Double Take (Issue 8) will give you 1.42% (paid monthly but you can only make 2 withdrawals per calendar year and closure counts as a withdrawal).

G_M

what do the terms of your particular savings product say?



Either tell us the terms or tell us the product......

Dazed_and_confused

as I am aware it won't be the 1.01% rate due to early closure?

Surely from what you've posted the interest rate you will receive will still be 1.01%.

But you will be paid this for a shorter period if you close the account.

You haven't said when the year started for interest purposes - sometime in March 2018? - but if you close the account now it looks like you will be getting between 7 and 8 months worth of interest.