1 year savings accounts

funkey_monkey

Hi,

I’ve been trying to ascertain what type of account to place £40,000 of savings into and from advice obtained on another thread I have came to the conclusion that a 1 year fixed savings account would be the best option for me.

So I would like to place the money in an account which will not penalise me severely for an early withdrawal (if I so desire to do so) – I am a FTB but with the way the market is at present I am not sure whether I’ll be buying within the next 12 months.


What are the best 1 year savings accounts on the market which would suit my needs and have good feedback? I just want the highest rate for my savings :j


Thanks.

Steve_xx

The first £3k should go into an ISA so that your interest is tax-free. Kent Reliance Building Society currently pays 6.05% on its Direct Variable Rate ISA.

http://www.krbs.co.uk/directisa.aspx

The remainder could go into a 1 year bond with ICICI Banks' Hi-Save Term Deposit, paying 6.85% AER. If you withraw early the rates will drop to 5.75%.

http://icicibank.co.uk/hisave_termdeposit.html

paulboy83

Or perhaps the northern rock access bond, its 6.5% for a year and you can make withdrawals at any time (but cant add to it once they close it)

http://www.northernrock.co.uk/

Steve_xx

paulboy83 wrote: »

Or perhaps the northern rock access bond, its 6.5% for a year and you can make withdrawals at any time (but cant add to it once they close it)

http://www.northernrock.co.uk/

Yes I thought about that one but discarded it due to the fact that you have to write to them to get your money out. I reckoned it could take quite a while to get your cash back.

funkey_monkey

Thanks guys for the replies.

What about Anglo Irish’s 1 Year Fixed Rate Bond @ 6.75% AER (5.4% net)? Are you guys happy with ICICI as a bank. I've a bit conserative with my money and the bad reports about ICICI are still flashing in the back of my mind.

Once again thanks for the replies.

Steve_xx

funkey_monkey wrote: »

Thanks guys for the replies.

What about Anglo Irish’s 1 Year Fixed Rate Bond @ 6.75% AER (5.4% net)? Are you guys happy with ICICI as a bank. I've a bit conserative with my money and the bad reports about ICICI are still flashing in the back of my mind.

Once again thanks for the replies.

Yes the Allied Bond looks ok, remember though that if you make an early withdrawal you are subject to 60 days loss of interest. Also there's this thorny little clause:

4.4. Any charge for early withdrawal will be offset against
any accrued interest not yet paid. If there is insufficient
accrued interest any outstanding charge will be deducted
from your Account. The Inland Revenue has advised
us that such a charge against capital is not a reduction
of interest, but a capital loss. Therefore any portion
of charge deducted from capital is not a reduction in
interest but a specific charge for early withdrawal.

Don't worry about the ICICI Bank. It's fine and like all other banks that operate in the UK it is protected 100% upto the first 35k invested.

funkey_monkey

I see for the ICICI bank I'll need to have a savings account as well to get the fixed term deposit a/c...

It's 6.41% - which is more than my Sainburys @ 6%

Does this mean I can have up to £70k with ICICI as I'll have 2 accounts with them?

Steve_xx

funkey_monkey wrote: »

Does this mean I can have up to £70k with ICICI as I'll have 2 accounts with them?

I'm afraid not. It's 35k per institution, not per account. If it was a joint account/s then it would be 70k.

tradetime

You might also want to look at Icesave 6.70% for one year fixed, much easier to open than ICICI in my personal experience and no requirement for another account with them.
Only thing I see you may want access to the money, I think this is not possible with Ice.

I would suggest you look at the best instant access, if you really think you may want early access to the money, the penalties for early access with most accounts will kill all your interest, otherwise.
Ice is paying 6.3% variable at the moment, ICICI 6.41% and there are others, I think A&L may be doing 6.5% on an eSaver

funkey_monkey

Right, I'm now thinking of opting ofr the IceSave 6 month fixed rate account with the option of 6.65% paid at maturity or 6.56% paid monthly.

I've tried to work out the difference in Excel between using the two rates and there seems to be 5p in favour of monthly. Is this the best option?

For my needs I believe this to be the best option as I'm not 100% sure about tying it up for 1 year.


As an side to this, if I took out a 1 year fixed term account and prior to its maturity I bought a house, would the banks give me a break as I'd be unable to access the money?
(I realise in current situation that this is unlikely, but I thought I'd ask anyway)

Thanks in advance of replies.

tradetime

Accessing money early from fixed interest term accounts is, if possible, usually punished quite severely by means of penalty loss of interest, which would probably leave you worse off than in the best instant access variable rates. The one possible exception to this may be Northern Rock which because of the reluctance of savers to put money in, I presume, had a fixed rate with no penalty for early withdrawal, not sure if they have another on the go atm.

Looks like they have a 6.5% fixed at the moment, that appears to have no penalty for early withdrawal.