1 yr fixed rate savings early withdrawal

anonmoose

I have been waiting for a 3% 1 yr savings account and have decided I might be waiting too long so thought I would go for the 2.6% 1 yr fix from Kent reliance.  However I have just gone to apply and it says withdrawals not allowed during the period.  Is this normal?  When I have had fixed rate savings before I thought I was able to withdraw but would forfeit all interest if I did.  Although I have no intention of accessing the money I hate the idea of not being able to even with penalties.  Especially in this rather volatile economic environment.

I have not been in the position to need fixed rate savings in many years so I don't know if this is the norm.  Any ideas? Also any opinions on if I should hold out for a 3%?  I need the money in around 15months so in theory could hold on a bit longer for a better rate.

Aviator1194

I am holding out for higher than the 2.6% I can get with Atom Bank for 12 month fixed

I firmly believe at least 3% will be available soon from someone.

In meantime I am holding my savings in chase at 1.5% until a new rate pops up somewhere.

I will hang on for maybe 4 weeks to see what happens

As for not allowing you to withdraw, I have come across this alot these days, however, most banks used to let you withdraw but losing approx 1 month of interest.

Daliah

Most banks will not allow you to withdraw from fixed rate accounts. The exceptions are ISAs, where withdrawals are allowed with various, severe, interest rate penalties, and death of the account holder.

masonic

The purpose of fixed rate savings accounts is that the money can be lent to borrowers over the whole term of the account. No capital reserves are needed, so the rates are higher. Unless you can commit for the full term, then you should not use them. As above, cash ISAs must permit access with an interest penalty, but have rates more in line with notice accounts for that reason.

soulsaver

It's normal... except with FR ISAs. 

How long will you wait for a 3% 1 year? Well if it's 2 months you may as well take the 2.6%
as £10000 for a year @2.6% is £260 and £10000 for 10 months at 3% is £246 
So in 12 months time you'd have been better off taking the lower rate... and rates by then will be above 3% for sure.

But then again.. and what if...etc

anonmoose

Ah it was possibly a FR Isa I had then.  As I say it's many years ago, I just remember withdrawals being allowed with high penalty.  I am happy to commit to the term I just wanted to check that was the norm.  Thanks to all who replied.  Currently in PBs so I might wait one more prize draw then jump ship!

wmb194

In my experience banks tend not to allow early access but some building societies are more open to it and Nationwide usually has fixed rate, non-Isa savings bonds that can be accessed early with an interest penalty e.g., this one, but branch only with 90d penalty for the one year and 180d for the two year https://www.nationwide.co.uk/savings/fixed-rate-bond/

Daliah

wmb194 said:

In my experience banks tend not to allow early access but some building societies are more open to it and Nationwide usually has fixed rate, non-Isa savings bonds that can be accessed early with an interest penalty e.g., this one, but branch only with 90d penalty for the one year and 180d for the two year https://www.nationwide.co.uk/savings/fixed-rate-bond/

I didn't know they offered that - you learn something new every day. Though their rates are absolutely terrible - - - we can get better instant access rates than they offer even for the 2 year account. I feel sorry for people who fall for their offers.

MK62

Daliah said:

 Though their rates are absolutely terrible - - - we can get better instant access rates than they offer even for the 2 year account. I feel sorry for people who fall for their offers.

You'd be surprised how many people either don't bother looking at the savings market for alternatives at all, or else give it little more than a cursory glance......maybe a case of "the more you have the harder you tend to look".....

Albermarle

MK62 said:

Daliah said:

 Though their rates are absolutely terrible - - - we can get better instant access rates than they offer even for the 2 year account. I feel sorry for people who fall for their offers.

You'd be surprised how many people either don't bother looking at the savings market for alternatives at all, or else give it little more than a cursory glance......maybe a case of "the more you have the harder you tend to look".....

On the opposite side, I think debating  about choosing to take a 2.6% rate now, or wait for a hopefully 3% rate soon, is probably a waste of time/energy unless you really have a huge stash. For most people the amounts involved either way are peanuts compared to inflation etc. 
I am not saying that some shopping around is not useful, but when it comes down to worrying over the last 0.1%  and/or the hassle of opening new accounts to get that, then it seems hardly worth it.

Yorkshire_Pud

Daliah said:

Most banks will not allow you to withdraw from fixed rate accounts. The exceptions are ISAs, where withdrawals are allowed with various, severe, interest rate penalties, and death of the account holder.

I just closed my Coventry BS fixed ISA 1.2% opened in January this year and due to mature May 2024. Six month interest penalty paid and a net loss on the capital sum deposited. To say I am ‘fed up’ is an understatement but pragmatically I will get more interest from bond paying 2.45% and 2.61% for 12 month which will cover the loss and buy new bonds maybe in 12m. First time I have ever closed a bond early.

As for Coventry BS I’m going to send them to Coventry from now on.