Notice accounts and rising rates

JonB_3

I have a 90 day notice savings account. The bank has increased its rate but under a new "Issue" which they say is available to new and existing customers. However, they say I have to give the 90 days notice and apply for a new account to get the better rate. 

Thrugelmir

You appear to answered your own question. 

InvesterJones

Yep. It's for existing customers, not existing funds. As an existing customer you can put new funds in the new issue I'd expect.

JonB_3

So there is a danger in having long notice accounts at a time of increasing interest rates. The bank should allow me to transfer from the existing account to the new Issue account without holding me to the notice period as I am not withdrawing funds from the bank.

cx6

that is not how notice accounts work unfortunately.

Thrugelmir

JonB_3 said:

 The bank should allow me to transfer from the existing account to the new Issue account without holding me to the notice period as I am not withdrawing funds from the bank.

You've agreed to the contractual terms of the account. That's all that matters. Not possible to make rules up to suit oneself as circumstances change. 

george4064

JonB_3 said:

So there is a danger in having long notice accounts at a time of increasing interest rates. The bank should allow me to transfer from the existing account to the new Issue account without holding me to the notice period as I am not withdrawing funds from the bank.

It’s not all that bad. As you’ll still earn interest (from the original account) whilst you wait out the 90 days notice period, after the notice period is up you’ll be able to open up the new account, transfer the funds in and start earning the new higher rate of interest.

cx6

Exactly this - unless the difference in rates is substantial it is unlikely your 'losses' will be that much.

jimjames

JonB_3 said:

So there is a danger in having long notice accounts at a time of increasing interest rates. The bank should allow me to transfer from the existing account to the new Issue account without holding me to the notice period as I am not withdrawing funds from the bank.

Far more danger with having fixed term accounts, you need to wait 90 days, it would be far worse having to wait 4 years. It's the restriction you accept for getting a higher rate.

surreysaver

For balance, I've got three notice accounts paying over 2% which mature in a few months. It can work the other way as well!
Put money in notice accounts when rates are higher, not when they're lower

janusdesign

some banks, well at least one that I have an account with, do increase the rate applied to existing accounts.

I have a 95-day notice account where the last two BoE rate increases have been passed on in full - so it's now paying 1.50% to me, whereas new customers going to the bank can only get 0.85%... I don't think even a 1-yr fix could match that rate.

i'd be optimistic that future rises will be passed on too.