overnight accounts - do they exist?

Stonk

Overnight accounts and short fixed term deposit accounts will pay roughly money market interest rates - because the bank will simply lend out your deposit onto money markets. In the money markets there are "standard" interest rates (heard of LIBOR?), constantly varying, at which banks lend and borrow money from one another for various different terms (such as overnight, 1 day, 1 week, 2 weeks, 1 month, 2 months, 3 months). The account you are seeking will pay that corresponding rate, minus a bit.

Money market rates are presently just under 4.5% for all terms - i.e., *lower* than what you can get from an instant access savings account. This is because people tend to leave their money longer in a savings account, and not everyone wants to withdraw simultaneously, so the bank can "do better" than just lend the money out risk-free at LIBOR.

innovate

ahmilligan wrote:

I dont know anything about these either - sorry. My mother in law is in the same situation, she has put the capital from her house sale in account with ING, they have the best savings rates around and I'm pretty sure they are notice free withdrawl. Why not give them a try?

ING have a good, but not the best, savings rate around. Look up moneysupermarket . Read the terms relating to the better ones - First Direct have a potential pitfall clause (no interest for the month in which you make a withdrawal). Cahoot don't have any pitfall clause to my knowledge. ICICI pay the best rate but check this Forum for experiences of people.

innovate

jamesb wrote:

many thanks for your quick response. i'll look at ING. i've got savings account with cahoot, but the interest is annual - as it's a short term thing until we buy our next property, i'd rather go for monthly (greed!?).

thanks again - next stop, ING.

james.

The Cahoot savings account I have pays interest monthly, bang on the first of the month.

jamesb

thanks guys for all your advice. i've taken it on board and will carefully consider the options. in the meantime, i've shoved the money into a lloyds tsb online saver - until i've decided where it should go.

thanks again!

best,
james.

Limes

Intrigued by your final decision! I'm assuming you had one of these accounts open already and aren't looking for extra hassle in opening a new account. LTSB Online Saver is currently 4.30% AER which includes a 6 month 0.5% intro bonus. I suppose if it's not a permanent home for your money, then the 4.55% gross you get for the first 6 months is not bad. . . but not brilliant. This is also assuming that you have the annual interest option. Monthly the rate is even worse!!!! There are accounts out there that offer better rates and instant access without penalising you for wanting to move your money out and aren't a pig to set up or manage. I'm just wondering if it might not be interesting to get an idea from forum members as to which accounts are the easiest to set up and manage or that people have had the most positive experiences with - particularly given the poll that Martin's running about ICICI at the moment, oh and the fact that online savers are a difficult bunch to please!!!! Any takers?

Limes

Oh and forgot to mention if you've already had the account for some time, forget all the stuff about introductory bonuses!