Long-term easy-access savings account with fixed interest?

GMNN

Hello, 

Looking for some help regarding my search for my "ideal" savings account at the moment, as I'm struggling to find what I'm looking for - maybe it does not exist!

I'm of the opinion that interest rates are at (or very close to) their peak, and I would therefore want to lock-in a high savings interest rate for the medium-term (say next 3-5 years). I think a recession is likely for 2024, and inflation will continue to slowly come down, and therefore the BoE will start cutting rates 2H next year. That's just my opinion, and not looking for a debate, so let's just stick to the point of this thread, which is:

I'm looking for a savings account with the following characteristics:
- easy-access: I want to be able to add-in and withdraw money as much as I want, penalty-free
- fixed interest rate for the next few years: ideally 3-5 years, with the important point being that it stays fixed for the entire duration of the product; the bank should not have the ability to change the interest rate once opened
- monthly interest paid out

The problem is that it seems all the easy-access savings accounts have variable interest rates (where the bank can change the rate anytime with very little notice) AND all the fixed interest rate accounts (such as NS&I bonds) require locking-away a certain amount with no ability to top-up later or withdraw penalty-free..

I am of course willing to accept a lower rate than what's currently on offer from the top savings account. Looking at the 2/5/10y gilt yields in the 4.2-4.8% range, I think offering such an account with say a ~4% interest rate should be feasible.. But there just doesn't seem to be any on offer - is there really no demand for this kind of product? Or is there some kind of regulation or commercial drivers for banks which make issuing this kind of account a no-go?

Thanks in advance!

Lomcevak

What you're asking for is effectively free arbitrage on interest rates for the next 3-5 years, with the bank assuming the costs, so i'm guessing that doesn't exist. Wouldn't make any sense for them.

By locking in your money, the bank can use long-term instruments to assure their return. Instant access removes that for them - you'd effectively put all your money in this account when rates were below 4%, and remove it when they were higher. So it's a guaranteed win for you, guaranteed loss for the bank. Sure there would be lots of demand for that, but...

xylophone

How would what you  desire be of any advantage to the provider of the product?

Banks and building societies are not charitable institutions - they have obligations to shareholders/members.

Like everybody, you'll need to mix and match easy access/fixed rate?

wmb194

GMNN said:

Hello, 

Looking for some help regarding my search for my "ideal" savings account at the moment, as I'm struggling to find what I'm looking for - maybe it does not exist!

I'm of the opinion that interest rates are at (or very close to) their peak, and I would therefore want to lock-in a high savings interest rate for the medium-term (say next 3-5 years). I think a recession is likely for 2024, and inflation will continue to slowly come down, and therefore the BoE will start cutting rates 2H next year. That's just my opinion, and not looking for a debate, so let's just stick to the point of this thread, which is:

I'm looking for a savings account with the following characteristics:
- easy-access: I want to be able to add-in and withdraw money as much as I want, penalty-free
- fixed interest rate for the next few years: ideally 3-5 years, with the important point being that it stays fixed for the entire duration of the product; the bank should not have the ability to change the interest rate once opened
- monthly interest paid out

The problem is that it seems all the easy-access savings accounts have variable interest rates (where the bank can change the rate anytime with very little notice) AND all the fixed interest rate accounts (such as NS&I bonds) require locking-away a certain amount with no ability to top-up later or withdraw penalty-free..

I am of course willing to accept a lower rate than what's currently on offer from the top savings account. Looking at the 2/5/10y gilt yields in the 4.2-4.8% range, I think offering such an account with say a ~4% interest rate should be feasible.. But there just doesn't seem to be any on offer - is there really no demand for this kind of product? Or is there some kind of regulation or commercial drivers for banks which make issuing this kind of account a no-go?

Thanks in advance!

You'd need a stockbroker to buy them but the closest to your requirements might be to use gilts. They pay interest every six months but if you built a ladder of them with varying interest payment dates you could get close to receiving interest every month or two.

https://www.yieldgimp.com/

handful

Most guaranteed fixed accounts that I've seen allow deposits for a short period before getting locked down into the fixed rate. I'd be very surprised if you can find anything that allows future deposits at a fixed rate set in the past. Let me know if you find something that meets your request!

Albermarle

But there just doesn't seem to be any on offer - is there really no demand for this kind of product?

If such products existed there would be an avalanche of demand!

Although there a very few fixed term accounts that allow deposits after the usual short funding window.

I think these are mainly ISA's so there is a limit on how much you can add, and later transfers in are not allowed AFAIK. Also they can all be pulled at any time by the provider. Plus of course your money is still locked in for the fixed term or only withdrawable with a penalty.

Shawbrook is the provider often mentioned in this regard.