Cahoot Fixed Rate BOND - SAFE?

carlostk

I was wondering if the new Cahoot Fixed Rate Bond product is protected by the Financial Services Compensation Scheme.

Since it is a "bond", will it be considered an "investment" rather than a "deposit" and hence, not elegible to the GBP35,000 compensation scheme?


Thanks

aleph_0

carlostk wrote: »

I was wondering if the new Cahoot Fixed Rate Bond product is protected by the Financial Services Compensation Scheme.

Since it is a "bond", will it be considered an "investment" rather than a "deposit" and hence, not elegible to the GBP35,000 compensation scheme?

The use of the term 'bond' is just marketing. It is just a (deep breath) 'fixed rate saving account which you can't withdraw until the maturity date', and is covered by the FSCS the same as all other savings else.

dunstonh

One of my pet hates is the way some of the banks misname their products to make them sound better. If the marketing men at banks thought that calling it "cahoot fixed rate chocolate account" would sell more of it they would despite it not being chocolate.

It is not a bond. It is a fixed term deposit.

Have you seen that Natwest advert where they say bamboozle them with terms like bond.... Thats the banks for you.

Bonds in their true sense do come under the investment FSCS rules. Fixed term deposits incorrectly called bonds do not.

Mikey17

Does anyone know the length of this account.I was looking for a fixed term savings account of at least 3 years.Thanks for any answers.Also,the previous reply says,fixed rate savings accounts called bonds,are not protected.Is this product protected.

Meltdown_2

dunstonh wrote: »

It is not a bond. It is a fixed term deposit.
....
Bonds in their true sense do come under the investment FSCS rules. Fixed term deposits incorrectly called bonds do not.

Mikey17,
what dunstonh said was (of course) correct, but his brevity at the end might have confused you.
"Bonds in their true sense do come under the investment FSCS rules.
Fixed term deposits incorrectly called bonds do not."
... They come under the FSCS deposits rules (i.e. the £35,000 limit).

Mikey17

Many thanks for the quick reply Meltdown, much appreciated

dunstonh

Thanks meltdown.

The FSCS limits vary with different types of investment. Bonds are covered under the "investments" limits. Fixed term deposits are covered under the "savings" limits.

So, when a bank incorrectly calls a fixed term deposit a bond it can lead to confusion.

lolly5648

dunstonh wrote: »

Thanks meltdown.

The FSCS limits vary with different types of investment. Bonds are covered under the "investments" limits. Fixed term deposits are covered under the "savings" limits.

So, when a bank incorrectly calls a fixed term deposit a bond it can lead to confusion.

I'm confused. I have one year fixed rate bonds with Birmingham Midshires, Icesave and Nationwide, are they all covered up to the £35,000 limit?

dunstonh

lolly5648 wrote: »

I'm confused. I have one year fixed rate bonds with Birmingham Midshires, Icesave and Nationwide, are they all covered up to the £35,000 limit?

If they are fixed term deposits then they are covered by the FSCS deposit scheme.

if they are bonds (in the correct sense) then they are covered by the FSCS investments scheme which has different limits.

if they are investment bonds (also misnamed but have been for much longer - generically they are single premium endowments or single premium whole of life assurance. You can see why they called them something different!!!) then they are covered by the FSCS life assurance limits (which is actually the most generous).

Some of the banks misname their fixed term deposits and call them bonds. They are not bonds but the marketing men seem to think that bonds makes them sound better. The ones you have are fixed term deposits and come under deposits protection.

RayWolfe

dunstonh wrote: »

"cahoot fixed rate chocolate account"

Can you tell me when this matures, I like the [strike]sound, look[/strike], taste of that.

dunstonh

RayWolfe wrote: »

Can you tell me when this matures, I like the [strike]sound, look[/strike], taste of that.

SShhh. Dont say that, a bank marketing man may be reading what you have said...

... soon to be released, Barclays Highland Reserve Mature Whisky Bond.


Highland - suggesting high
Reserve - a common used phrase
Mature - suggesting a maturity
Whisky - yum
Bond - isnt everything a bond?