What is the penalty for closing a fixed savings account?

chris112

Thank you for all of the replies, it is very insightful

as it is not me who opened a this account I don't actually know what bank or account it is but I do appreciate the feedback

tunde10

Yeah, nothing you can do i'm afraid.

I am also locked into putting £30k in 1.52% fixed account and its very frustrating. Mine still has 6 months to mature, so seeing an account paying 2% for 6 months is annoying. 

I wish ISA fixes would pay more giving people the flexibility in a rapidly changing market. They are required to allow withdrawals usually with approx 3-6 months loss of interest.

p00hsticks

tunde10 said:

I wish ISA fixes would pay more giving people the flexibility in a rapidly changing market.

The thing is that 'flexible' and 'fixed' are basically opposites, and products have to work for both the customer and the bank. 

If you want flexibility you go for a variable (usually lower) rate. You get the flexibility of being able to add or wthdraw your money, the bank gets the flexibilty of being able to adjust the rate depending on cicumstances.

Whereas with fixed products you get a (usually higher) rate in return for guaranteeing the bank your money for a fixed period of time. 

phillw

chris112 said:

Thank you for all of the replies, it is very insightful

as it is not me who opened a this account I don't actually know what bank or account it is but I do appreciate the feedback

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?

 as if it is not too much I will do this

This is my first fixed savings Account

I'm a bit confused.

soulsaver

tunde10 said:

Yeah, nothing you can do i'm afraid.

I am also locked into putting £30k in 1.52% fixed account and its very frustrating. Mine still has 6 months to mature, so seeing an account paying 2% for 6 months is annoying. 

I wish ISA fixes would pay more giving people the flexibility in a rapidly changing market. They are required to allow withdrawals usually with approx 3-6 months loss of interest.

@tunde10 So how much do you think you'll miss out on?

phillw

tunde10 said:

I wish ISA fixes would pay more giving people the flexibility in a rapidly changing market. They are required to allow withdrawals usually with approx 3-6 months loss of interest.

The whole point of someone offering you a seemingly attractive fixed rate, is that they think that interest rates will go up & they want you locked in.

Bigwheels1111

70k isa fixed at 0.5% was the best deal 13 months ago.
Can’t wait to pull it out of isa an invest it in a standard fixed.
With a bit of luck I might get near 3% when it matures.
2 more boe base rate rises might get it there.
The dream for me is 5% fixed for 5 years annual payout.
That would be the sweet spot.
Nice amount to live on and just below £17.5k so no tax to pay.

kaMelo

Bigwheels1111 said:

70k isa fixed at 0.5% was the best deal 13 months ago.
Can’t wait to pull it out of isa an invest it in a standard fixed.
With a bit of luck I might get near 3% when it matures.
2 more boe base rate rises might get it there.
The dream for me is 5% fixed for 5 years annual payout.
That would be the sweet spot.
Nice amount to live on and just below £17.5k so no tax to pay.

No pension to consider?

lozzy1965

Bigwheels1111 said:

70k isa fixed at 0.5% was the best deal 13 months ago.
Can’t wait to pull it out of isa an invest it in a standard fixed.
With a bit of luck I might get near 3% when it matures.
2 more boe base rate rises might get it there.
The dream for me is 5% fixed for 5 years annual payout.
That would be the sweet spot.
Nice amount to live on and just below £17.5k so no tax to pay.

You do realise that if we get 5%, then inflation is likely to be higher too?  This mean your money won't go as far and the value of it will be eroded more quickly over time.  It's not how much return one gets on one's savings/investments, it's how much return one gets vs inflation that is important.

eskbanker

Bigwheels1111 said:

70k isa fixed at 0.5% was the best deal 13 months ago.
Can’t wait to pull it out of isa an invest it in a standard fixed.
With a bit of luck I might get near 3% when it matures.
2 more boe base rate rises might get it there.

Unlike the non-ISA account that OP was referring to, with cash ISAs you do have the option of early termination, albeit with a loss of interest, so you should be able to do the calculation about whether you'd win by transferring under penalty, i.e. unlike OP you don't have to wait....