Impact of time lag in withdrawing funds

Fiftyniner2

I have an Easy Access savings account with Charter. It has 
long irked me that, when I make a withdrawal, the requested amount is credited to the target account one banking day after it has been debited from my savings account. This means that I lose a day’s interest on each withdrawal, an impact that is not reflected in the quoted AER. Neither Charter nor MSE flags this drawback. I find this quite insidious, although I do appreciate that clearing banks, who are able to make faster payments, belong to an elite club that very rarely admits new members - Chip/Clearbank being a noted exception. Does anyone else feel that this issue of delayed withdrawal and lost interest should be given more prominence?

fabsaver

Yes I agree that this information should be made much more prominent in the Summary Box document, when opening an account.

Usually information on withdrawal timescales is buried deep in the general terms and conditions and hard to find. Sometimes the terms will be so vague that the only way to find out for sure is to actually make a withdrawal.

Albermarle

The easiest solution if the issue bothers you is to only have savings accounts with clearing banks.
I can live with the small inconvenience of a days delay on withdrawals, if it means I get a better interest rate in the first place.

eskbanker

Fiftyniner2 said:

I find this quite insidious, although I do appreciate that clearing banks, who are able to make faster payments, belong to an elite club that very rarely admits new members - Chip/Clearbank being a noted exception. Does anyone else feel that this issue of delayed withdrawal and lost interest should be given more prominence?

It's not an elite club, anyone can join if they're prepared to invest in their offerings, as discussed in the numerous recent threads about this....

Barkin

Fiftyniner2 said:

Does anyone else feel that this issue of delayed withdrawal and lost interest should be given more prominence?

The answer's simple - use accounts that offer instant, or near instant, withdrawals. 

Personally I've not encountered a product that doesn't specify withdrawal timescales in the product t's&c's, which I always read thoroughly... 

Malchester

Maybe try having 2 accounts. One instant access and another a bit slower. I have Chip which gives me the flexibility of instant deposits and withdrawals. It's not always the best rate but as an instant access account it is worth it. I also have a Ford Flexible Saver with, currently almost the same rate where withdrawals arrive same day (Mon to Fri) if withdrawal is requested before 1pm. Deposits to Ford can be made any day but I think withdrawals are only Monday to Friday 

There are many other options for accounts where you can do this. 

I always find out speed of deposits and withdrawals before opening an account. 

OldScientist

Fiftyniner2 said:

I have an Easy Access savings account with Charter. It has 
long irked me that, when I make a withdrawal, the requested amount is credited to the target account one banking day after it has been debited from my savings account. This means that I lose a day’s interest on each withdrawal, an impact that is not reflected in the quoted AER. Neither Charter nor MSE flags this drawback. I find this quite insidious, although I do appreciate that clearing banks, who are able to make faster payments, belong to an elite club that very rarely admits new members - Chip/Clearbank being a noted exception. Does anyone else feel that this issue of delayed withdrawal and lost interest should be given more prominence?

I don't think they could include it in the AER since it would depend on an assumption about the number of withdrawals and the amount in each withdrawal.

To be fair to CSB, the time taken for funds to reach nominated accounts ('end of next working day') is currently the second FAQ (https://www.chartersavingsbank.co.uk/Help/FAQ ) which is linked from their home page.

Otherwise, you're right - withdrawing £10k would, with the current interest rate of 4.55%, cost about £1.25 in lost interest. By comparison, withdrawals from Marcus (which is currently paying 4.0%) typically arrive within an hour or so.

Albermarle

If you have an easy access account with the same bank you have a current account with, then transfer can be instantaneous in both directions with one click. However the interest rate will probably be in the 1.5% to 3% area.....

Fiftyniner2

The comments so far have helped to clarify my thinking on this. The example given of Ford Flexible Saver demonstrates that it is not just clearing banks that are able to credit the target account on the same day that the savings account is debited. So the reason that Charter themselves have given me for the delay (i.e. that they are not a clearing bank) is definitely not the whole story and may even be seen as somewhat disingenuous. My reference to the ‘elite club’ of clearing banks was to do with the fact that ClearBank is the first new clearing bank in 250 years. My unstated thought was that it might be unreasonable to expect Charter to become a clearing bank, given how difficult I assume it must be to become one. But I now feel less sympathetic towards Charter, in the light of the Ford example. I fully acknowledge that Charter are clear in their Ts&Cs and FAQs about how long it takes your withdrawal to hit your nominated account, but the fact that your savings account is debited immediately is nowhere explicitly stated: someone, somewhere is having the benefit of that withdrawal amount for one banking day and it isn’t me. I agree that the easiest thing is to pick a savings account that has genuine instant access. It’s a shame that it’s difficult to make like-for-like comparisons, but I appreciate the point about the dependency on the withdrawal amount(s), and the £10k example is helpful. I may well move from Charter to Chip, in spite of the slightly lower interest rate. Thanks for all the comments.

EthicsGradient

If your turnover in a savings account for a year is equal to the average balance (eg, in our example, your total withdrawals are £10,000, and that's also your average balance), then it's basically 1/365 of the yearly interest involved - or about 0.013%, currently. Chip is currently 0.04% behind Charter; so you'd need to be moving over 3 times the average balance in and out during the year. I doubt many people fit that.

Albermarle

But I now feel less sympathetic towards Charter, in the light of the Ford example

I would be guessing it is more down to a better IT/admin system than anything else.