The Top Fixed Interest Savings Discussion Area

CheekyMikey

subjecttocontract said:

Why would anyone consider putting savings into a fixed interest account when we have finally, after many years, reached a period of rising interest rates ? 

Because you can put money into a 1 year fixed interest account today and immediately be earning 2.7% interest…the best instant access accounts are paying 1.6% and even when the BOE raise rates three or four times again in the next year, the instant access rates will not reach 2.7%. So if you definitely won’t need access to the money, it is surely logical to fix.

janusdesign

CheekyMikey said:

subjecttocontract said:

Why would anyone consider putting savings into a fixed interest account when we have finally, after many years, reached a period of rising interest rates ? 

Because you can put money into a 1 year fixed interest account today and immediately be earning 2.7% interest…the best instant access accounts are paying 1.6% and even when the BOE raise rates three or four times again in the next year, the instant access rates will not reach 2.7%. So if you definitely won’t need access to the money, it is surely logical to fix.

I think the OPs point was about fixing now as compared to waiting until after, at least, the next rate rise (supposedly 0.5%).

if a rise of that size were to occur, then you maybe looking at a 3% 1-Yr rate in a months time... I think i'd prefer to wait a month as my rough calc of putting 85k in an instant account for a month and then fixing at 3% should earn more interest than fixing at 2.7% today.

RG2015

CheekyMikey said:

subjecttocontract said:

Why would anyone consider putting savings into a fixed interest account when we have finally, after many years, reached a period of rising interest rates ? 

Because you can put money into a 1 year fixed interest account today and immediately be earning 2.7% interest…the best instant access accounts are paying 1.6% and even when the BOE raise rates three or four times again in the next year, the instant access rates will not reach 2.7%. So if you definitely won’t need access to the money, it is surely logical to fix.

There is a failure of logic here.

If it is deemed unwise to fix when rates are rising, then it must be wise to fix when rates are falling.

The problem is that the banks can see the writing on the wall, and set their rates accordingly.

The chances are that they will will be hedging before we get the chance to beat them at their own game.

kaMelo

janusdesign said:

CheekyMikey said:

subjecttocontract said:

Why would anyone consider putting savings into a fixed interest account when we have finally, after many years, reached a period of rising interest rates ? 

Because you can put money into a 1 year fixed interest account today and immediately be earning 2.7% interest…the best instant access accounts are paying 1.6% and even when the BOE raise rates three or four times again in the next year, the instant access rates will not reach 2.7%. So if you definitely won’t need access to the money, it is surely logical to fix.

I think the OPs point was about fixing now as compared to waiting until after, at least, the next rate rise (supposedly 0.5%).

if a rise of that size were to occur, then you maybe looking at a 3% 1-Yr rate in a months time... I think i'd prefer to wait a month as my rough calc of putting 85k in an instant account for a month and then fixing at 3% should earn more interest than fixing at 2.7% today.

In the current climate or rising interest rates it will always feel like a better offer is coming along but whilst waiting you're earning less interest on money in the easy access accounts.  Rather than an all or nothing approach spread your bets by putting smaller sums in a variety of fixed term accounts such as 90 day notice, six months fixed and twelve months fixed. With that sum of money you could space them out so as to have one maturing every month..
That way you get more interest than an easy access account and you will be able to access those better rates each month as the fixed term accounts mature.

To expand on @Sea_Shell jam analogy, you can have a bit of jam today, jam tomorrow and a few nibbles of jam in between too..

RG2015

Spot on @kaMelo .

I fixed £10k last year at 1.25% which seemed a great rate when easy access was 0.50%

It’s looking rather sorry now though.

Now, by way of mitigation, I am only fixing in tranches of £3k once a month and filling gaps with 6 month deals.

I now have a maturing account in 10 of the next 12 months with the later ones way above 1.55%.

Cammie50

“In this business, if you're good, you're right six times out of ten. You're never going to be right nine times out of ten”

Peter Lynch

wmb194

RG2015 said:

CheekyMikey said:

subjecttocontract said:

Why would anyone consider putting savings into a fixed interest account when we have finally, after many years, reached a period of rising interest rates ? 

Because you can put money into a 1 year fixed interest account today and immediately be earning 2.7% interest…the best instant access accounts are paying 1.6% and even when the BOE raise rates three or four times again in the next year, the instant access rates will not reach 2.7%. So if you definitely won’t need access to the money, it is surely logical to fix.

There is a failure of logic here.

If it is deemed unwise to fix when rates are rising, then it must be wise to fix when rates are falling.

The problem is that the banks can see the writing on the wall, and set their rates accordingly.

The chances are that they will will be hedging before we get the chance to beat them at their own game.

You can speculate against them. For instance I did well with 5% five year fixed rate savings bonds a little after the GFC but before the Bank and Treasury crashed savings rates when funding for lending and things like that were introduced. I still have a 4% ten year bond with a couple of years left to run that was doing well relative to deposit rates and inflation until recently.

Bobblehat

kaMelo said:

In the current climate or rising interest rates it will always feel like a better offer is coming along but whilst waiting you're earning less interest on money in the easy access accounts.  Rather than an all or nothing approach spread your bets by putting smaller sums in a variety of fixed term accounts such as 90 day notice, six months fixed and twelve months fixed. With that sum of money you could space them out so as to have one maturing every month..
That way you get more interest than an easy access account and you will be able to access those better rates each month as the fixed term accounts mature.

To expand on @Sea_Shell jam analogy, you can have a bit of jam today, jam tomorrow and a few nibbles of jam in between too..

Very succinctly put! It is the tactic that I have recently started to follow, having seen it mentioned on this forum (on different threads) several times in the past. So, thanks to those who mentioned this.

Patr100

Gatehouse now offering 2.75% expected rate (Islamic finance) (min £1000)with optional monthly interest payment.
(unlike previous 2.75% payer Tandem)

Olinda99

Investec 90 day at 2.1%