Capital and interest and withdrawal penalties

WattieHudds

Quick question, when a flexible savings account talks about withdrawals, limits on withdrawals and potential penalties (usually in terms of lost interest), am I right in assuming that when they talk about withdrawals this is withdrawal of some (or all) of the original capital and not earned interest?

In other words it should be possible to set up a flexible savings account so interest earned is paid directly into a bank account monthly, leaving the capital untouched, and as such not incur any early withdrawal penalties? For reference, the specific accounts I'm currently looking at are the ones in the Best Buy list from Skipton, Coventry and Leeds BSs.

surreysaver

Depends upon the T&Cs of the account. They can all be different. If you tell us what account it is, someone with experience may be able to assist, rather than leaving us all to guess with the result you act on incorrect information.

masonic

Some accounts offer an option to have the interest paid away when you apply. Some do not. Generally interest paid away would not count as a withdrawal, whereas interest withdrawn by you would.

But as surreysaver says, you would need to look at the terms of specific accounts.

The Skipton 4.5% and Leeds 4.3% easy access accounts don't appear to have any withdrawal penalties, whereas Coventry 4.5% does after the 5th withdrawal. Coventry says "Interest can be added to the account or paid into another suitable account", so you could have it paid away in that case to avoid withdrawing. But all of those can be beaten by Cahoot's Simple Saver @ 4.55% with no withdrawal restrictions.

WattieHudds

Thanks, I'll check out the Ts & Cs. Naively I assumed there would be a fairly standard definition of 'withdrawal'...... 

InvesterJones

WattieHudds said:

Thanks, I'll check out the Ts & Cs. Naively I assumed there would be a fairly standard definition of 'withdrawal'...... 

Withdrawal is pretty standard, it's the penalties/allowances for it that are not.

edwhow

Cahoot sunny day saver is now 5% aer for 12 months, withdraw any time, no penalties afaik but keep below £3k to get the interets.

I don't see it mentioned in the "savings" section.

Barkin

edwhow said:

Cahoot sunny day saver is now 5% aer for 12 months

Not quite. It's a 12 month term, but the rate (currently 5%) within the term is variable.