Great deal from Derbyshire BS (Limited offer)

Dave_The_Rave_2

MSE Martin has commented previously on the great deal from the DerbyshireBS for their regular savings accounts paying 5.85%.

However at the moment, they have a special offer on where you can have TWO regular accounts. As the maximum you can pay in is £1000 per month, over a year that amounts to a total investment of £24K in the first year alone.

Remember you must pay in regularly to qualify for the bonus at the end of the 12 months.
Derbyshire Regular Savings Link

Although the home page calls it 'Wedding Savings', the adviser said they were offering it to everyone. Otherwise darn expensive if you have to get married to apply !! (It would cost you more in the long run :rotfl: )

grumbler

You are more than a week late!

'Derbyshire Regular Saver 5.85%,Open 2 acc ltd offer '

Dave_The_Rave_2

Darn ! Someone beat me to it !

Milarky

I was trying to think of the potential benefit of this offer, as you have to pay twice the minimum regular amount don't you?

If you have to salt away a lot quickly then it pays dividends to have two accounts of course..

The other advantage is the ability to close one account [what notice period is required?] whilst keeping the other going - but wouldn't you just make a withdrawal for the exact amount you wanted rather than have to withdraw an entire balance?

deemy2004

The advantage is obvious you get 5.85% (AER) on £24k per year instead of £12k......

Shall I tell you why they are doing this offer ?

Its obvious... after 31st July they will CUT the rate to something daft like 5% !!! And thus you are locked INTO a low paying account. The rates are NOT fixed ! and can be varied at anytime !

You have been warned ! Pencil in 1st August 2005 as the day they drop the rate from 5.85% to possibly 5.1%

mary

Do you think this is really likely? I have 2 cheques for a £1,000 each ready to post today on the worktop and was planning on putting the full £24,000 in their direction. I had been persuaded by Martin that they had had a very good record over a period of time with their rates and did check them out in their "previous rates" section. Do you think they would drop their rate so much? I know it can happen with others i.e. Alliance and Leicester with their children's savings, which we're now moving to Halifax Save4it, when they will drop from 5.35 to 3.65%. Do you have some insider knowledge or is it just a hunch?

Is it really likely that they will drop the rate the following day?

I suppose at the very worst, even if I did continue to open it, I can always then drop it to £10 per month ever afterwards.

Kazza242

deemy2004 wrote:

The advantage is obvious you get 5.85% (AER) on £24k per year instead of £12k......

Shall I tell you why they are doing this offer ?

Its obvious... after 31st July they will CUT the rate to something daft like 5% !!! And thus you are locked INTO a low paying account. The rates are NOT fixed ! and can be varied at anytime !

You have been warned ! Pencil in 1st August 2005 as the day they drop the rate from 5.85% to possibly 5.1%

The Derbyshire BS run this offer every year and yet the interest rate on their regular savings account has always remained consistently competitive. In fact, they were running this same offer in March 2004 until the end of July that year. If anything the interest rate offered by the Derbyshire on these accounts has gone up from 5.20% (Mar 04) to 5.85%.

Even if you were correct about the Derbyshire dropping the interest rate, account holders can still close their accounts at anytime without penalty. The accrued interest will be paid out (along with the bonus rate) when the account is closed - provided all required deposits are met and no more than 1 withdrawal is made up to that point. I imagine, like me, many other account holders would take their business elsewhere if the rate became uncompetitive and would do so without any penalty.

ReportInvestor

deemy2004 is right to highlight the tactics likely to be followed by any organisation offering such a stunning rate. And with regular saver accounts, the vast majority of the interest will be earned in the second half of the first year.

But (s)he is wrong to be quite so alarmist for several reasons.

Derbyshire BS has recently rebranded itself with the strapline "How fair is that"
Derbyshire BS has a dedicated and very sympathetic director - Sophie Snell - to deal with members and relay their concerns directly back to the board.
Derbyshire is looking to expand its assets having recently dropped out of the "top ten". It has more reason than most other societies to attract and retain savers' cash because it has lower members' funds than 95% of other societies.

So deemy2004's apocalyptic scenario seems highly unlikely.

It clearly makes sense for all MSE readers to check the rate as soon as they have picked up their first annual bonus and before they commit large sums of money in year 2. However my judgement is that they will do well enough from this account for at least the first year.

deemy2004

1. You can't use 2004 as an example as during that period all savings interest rates were rising ! Well up until Sept 2004.

2. Derbyshire - HAS cut interest rates on all of its other products, hence it is logical to expect it will CUT interest rates on its regular saving.

3. YOU DO LOSE your bonus if you close your account early.

4. The money markets i.e. gilts and LIBOR futures are already discounting further falls in interest rates. Hence derbyshire is behind the curve and has NO choice but to cut interest rates.

5. It has nothing to do with the Director being a soft touch... :rotfl: Its what they have to do given the state of the financial markets.

Offcourse I hope I am wrong since I already have an derbyshire monthly saver... Just that if It was me and I was looking to cut interest rates - This would be a very, very good way to get people in before I cut rates. maybe the rate cut won't be as bad as it could be maybe down to 5.45% . But I will be very surprised if rates are NOT cut given the state of the interest rate futures.

Hobo_2

With the 2 account offer with £1000 each max per mth, they are after the big inflow of money, IMHO we the "members" will keep the rate competative due to the no penalty withdrawal/ closesure in their T&C ,cos they know there could be a large (and quicker) outflow if we vote with our feet

ReportInvestor

deemy2004 wrote:

YOU DO LOSE your bonus if you close your account early.

Which is why I suggested that all MSE readers should check the rate IMMEDIATELY after their first year's interest.

As you know, the banking code - to which Derbyshire BS subscribes - requires a company to write to its customers/members if it reduces its interest rate by more than 0.5% in one year relative to interest rates.

So I'll have a small side bet with you that Sophie Snell doesn't want an earful of complaints from the MSE army, with accompanying press criticism, and that the Derbyshire rate won't be less than 0.6% above base rates this time next year (5.35% if base rates haven't changed).