Bradford & Bingley e-savings rate drop

Dave_The_Rave_2

Just had this from Bradford & Bingley...

From 18th July 2005, B&B will be lowering the interest rate paid on your
eSavings account to 5.10% gross p.a. / 5.10% AER* (4.98% gross / 5.10%
AER* for monthly interest).

Guess it's all change again....

Stonk

That's still a reasonably competitive rate, though. There has been a tendency recently to reduce rates on internet savings accounts, so I'd be very cautious about moving the money to a provider who hasn't done so yet. Chances are it won't be long until they do. Money market rates are dictating this.

The A&L (5.00%), AA (5.11% for new customers, 5.21% if you already have one), and now B&B (5.10%) accounts have done their drop. ING (5.00%) probably won't drop. I would expect NR's Tracker Online (5.41%) to go next. There's only really ICICI (5.40%) that you might expect to pay significantly more than 5.10% for much longer.

The cost in lost interest of withdrawing money to your current account and back out to a different savings account can seriously dent your overall interest rate, and I wouldn't do it for a 0.15% increase. Depending on how much money you shuffle, who your current account is with, and which day of the week you do it on, it can take months to recoup the lost interest. If your new account drops its rate during that time, you've lost money overall.

Stonk

Also, I think it reflects well on B&B that they notified you before the drop! A&L left it 3 weeks after their drop from 5.35% to 5.00% before sending me a letter about it. The AA took 2 weeks. Both of which I knew about within 2 days of them happening, I should add, but most account holders would not have done.

I think the best policy is to spread your savings among several providers, to hedge against the ill effect of any one of them reducing their rate. To that end, I intend to keep about even money in AA and B&B, a bit less in ING, a bit more in NR. None in A&L, though - I'm disgusted at them, so I'm filtering the maximum £25K I had in there away into the other accounts (£4K at a time on Mondays through Lloyds).

realaledrinker

You might want to look at Co-op's high interest savings tracker account. Pays 0.25% below the base rate but there is a 0.5% bonus in the first year if you keep a min £5K in the account. This will therefore pay 5% at current rates & will only change in line with the base rate.

YorkshireBoy

Stonk wrote:

ING (5.00%) probably won't drop.

Oh yes they will!

http://forums.moneysavingexpert.com/showthread.html?t=73357

Stonk

Oh yes they will!

Me and my big mouth! People will be blaming me for that!

My holding in ING is going to drop significantly now, quite possibly to £1. Their great benefit has been consistency - over more than 2 years they have never been at the top, but you always knew they would be close. The way they increased rates by 0.9% as BoE base rates went up by 1.25% was annoying, but I stuck in there. However, now they are nowhere, and will lose my custom.

hansi

Dave_The_Rave wrote:

Just had this from Bradford & Bingley...

From 18th July 2005, B&B will be lowering the interest rate paid on your
eSavings account to 5.10% gross p.a. / 5.10% AER* (4.98% gross / 5.10%
AER* for monthly interest).

Guess it's all change again....

so I guess it would be ok to transfer money from ING into B&B, providing of course that they do not drop again next week when the BOE lowers the rate, maybe I'll wait till then!