Fixed Rate Bonds - early closure/transfer options

jerh

I took it a 2 year fixed rate bond with Bank of Scotland at the beginning of December 2022. The interest rate is 2.9% and I understand there is a penalty of 6 months interest if I close the account early. 

I would like to investigate the possibility of transferring the funds to a new fixed rate bond with Bank of Scotland as the interest rate is now far higher (5.5%) - i clearly rushed too early!

If I close my existing account early, will I still get the interest accrued over the last 7 months.  If that was the case, would the closure amount be similar to what I put in once the penalty for early closure is applied. 

This would still seem a worthwhile exercise given the additional interest I would accrue over the 2 year term with the new bond.. 

fabsaver

Yes you will still get the interest minus the 6 months penalty. Based on those rates it looks as if you'll be better off closing early and opening the new higher rate account.

You can plug the numbers into the MSE 'ditch my fixed cash ISA' calculator to confirm. It works equally well for non ISA accounts that allow early closure such as in your case.
https://www.moneysavingexpert.com/savings/isa-switch-calc/

jerh

fabsaver said:

Yes you will still get the interest minus the 6 months penalty. Based on those rates it looks as if you'll be better off closing early and opening the new higher rate account.

many thanks for this reply.  Much appreciated!

Albermarle

jerh said:

fabsaver said:

Yes you will still get the interest minus the 6 months penalty. Based on those rates it looks as if you'll be better off closing early and opening the new higher rate account.

many thanks for this reply.  Much appreciated!

Probably worth knowing that most non ISA fixed rate savings, do not allow early withdrawal closure under almost any circumstances.
Halifax is one of the few, and they are linked with BOS.

Doctor_Who

Albermarle said:

jerh said:

fabsaver said:

Yes you will still get the interest minus the 6 months penalty. Based on those rates it looks as if you'll be better off closing early and opening the new higher rate account.

many thanks for this reply.  Much appreciated!

Probably worth knowing that most non ISA fixed rate savings, do not allow early withdrawal closure under almost any circumstances.
Halifax is one of the few, and they are linked with BOS.

The Royal Bank of Scotland is another that allows non-ISA fixed rates (1 and 2 years) to be closed early. Their penalty for closure is also quite 'generous' given you won't receive back less than your deposit amount. Their rates might not be table topping, but the flexibility is quite good.

You can close your account by giving 35 days’ written notice to your branch. An Early Closure Charge will be deducted from the balance of your account, except in the event of your non-voluntary redundancy, death or some other circumstances, please contact us to find out more.

The Early Closure Charge will be the lower of the amount of interest earned on your account or 90 days’ interest.

The total amount you receive (including interest earned on your balance) will be no less than your deposit at the Fixed Term Start Date. For example, if you have earned 50 days’ interest you will only be charged an Early Closure Charge equivalent to 50 days’ interest. If you have earned 100 days’ interest you will only be charged an Early Closure Charge equivalent to 90 days’ interest.

https://www.rbs.co.uk/savings/fixed-term-savings-account.html

Albermarle

So now I am aware of four that allow early closure.
First Direct ( only have a one year fix available)
Halifax
BOS
RBS

Maybe there are more? 

fabsaver

Albermarle said:

So now I am aware of four that allow early closure.
First Direct ( only have a one year fix available)
Halifax
BOS
RBS

Maybe there are more? 

Lloyds, similar terms to Halifax and BOS.

NatWest, similar terms to RBS.

There was a discussion on here a few weeks ago:
https://forums.moneysavingexpert.com/discussion/6456350/which-fixed-term-savings-accounts-allow-withdrawal-for-a-fee

Doctor_Who

Albermarle said:

So now I am aware of four that allow early closure.
First Direct ( only have a one year fix available)
Halifax
BOS
RBS

Maybe there are more? 

Given rising interest rates and the number of posts about 'being locked-in to a fixed rate account' a list of providers that allow early closure (for a fee) of fixed rate accounts might be useful to some people.