What is the penalty for closing a fixed savings account?

chris112

About six weeks ago I opened a one year fix at 1.8% with £60K and as it was recently opened I was curious if I was to close this account and move the money into a more lucrative 2.5% two-year fix, what the penalty  would be?

 as if it is not too much I will do this

This is my first fixed savings Account

Daliah

I doubt you can close a fixed term account, unless it is an ISA, which yours doesn't seem to be. The T&Cs of your account will confirm or otherwise. What is your account called?

wiseonesomeofthetime

I did the same, opening a Tandem One Year Fix at 1.80%, however, I was mindful of the fact that it could be superseded quickly, so limited my exposure to that rate.

£60k is a big hit. However, as @Daliah states above, unless an ISA, practically all Fixed Term accounts are inaccessible before maturity unless exceptional circumstances.

george4064

You’ll need to read through the Terms & Conditions of the specific account you opened to find out what the penalty is.

If there is a penalty, you can always get in touch with the provider and ask to see if they will make an exception. If you are keeping the money with the same provider they might be willing to make an exception, but doubt they’d help if you were just going to transfer the money out to another provider.

p00hsticks

Without knowing the particular savings account it's impossible to say - some simply won't let you do it at all (ort of exceptional circumstances such as you dying) whilst others will let you do ti but with a loss of interest.

Check the T&Cs of the account.

Also - there's no guarantee that 2.5% over two years will end up being more lucrative as with interest rates rising at the end of the existing yearly one you may find another year fix at a higher rate still....

Stubod

As above, most "fixed rate accounts" are just that....ie fixed. (You will need to check the specific T&C's for that particular account).

With rates (finally) starting to go up, now is probably not a good time to open fixed rates accounts, particulalry for more than 1 year...IMHO...

Daliah

wiseonesomeofthetime said:

....practically all Fixed Term accounts are inaccessible before maturity unless exceptional circumstances.

exceptional circumstances, such as the account holder has passed away .......

wiseonesomeofthetime

Daliah said:

wiseonesomeofthetime said:

....practically all Fixed Term accounts are inaccessible before maturity unless exceptional circumstances.

exceptional circumstances, such as the account holder has passed away .......

I actually did type that in my original post, and then deleted it as didn't wish to sound morbid

Daliah

wiseonesomeofthetime said:

Daliah said:

wiseonesomeofthetime said:

....practically all Fixed Term accounts are inaccessible before maturity unless exceptional circumstances.

exceptional circumstances, such as the account holder has passed away .......

I actually did type that in my original post, and then deleted it as didn't wish to sound morbid

I know it's morbid but it's the only exception I am aware of

[Deleted User]

Exceptional circumstances might include loss of job by redundancy or serious illness or loss of spouse (by divorce or death). other conceivable circumstances might be major disruption to home (eg fire or flood). It is at the discretion of the bank/building society. 

refluxer

chris112 said:

About six weeks ago I opened a one year fix at 1.8% with £60K and as it was recently opened I was curious if I was to close this account and move the money into a more lucrative 2.5% two-year fix, what the penalty  would be?

I've had a number of fixed rate savings accounts with different providers over the years and, as stated above, it's very unlikely you'll be able to withdraw your money. Exceptions tend to be critical illness, death and (occasionally) particular financial hardship. Do read your T&Cs though to be sure.

If it makes you feel any better, I'm still locked in to a few (good at the time) fixed rate savings accounts during the height of the Covid pandemic that are considerably less than 1.80% ! They were taken out at a time when interest rates were rapidly heading towards zero and negative interest rates were even rumoured. At the end of the day, we can only make the best decision with the information we have at the time and sometimes we just have to chalk what later turn out to be mistakes down to experience.