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New Abbey current account and linked Fixed Rate account

Options
http://www.easier.com/view/News/Finance/article-28672.html

Both paying 6%pa. Fixed rate can recieve up to £250 of the £1000 minimum that must be deposited into the current account. It says this must be a 'main' current account but I think that just means £1000 to be credited [easily done with revolving payments]

Possible Scheme:

In Month 1:

Your Bank[1] --- £1250 --> Abbey 6pc c/a --- £250[2] ---> Abbey 6pc FRMS

Then during Months 2 - 12:

Your Bank[1] -- £1000 --> Abbey 6pc c/a --- £250[2] ---> Abbey 6pc FRMS

Your Bank[1] <-- £750 --- Abbey 6pc c/a

[1] Can just as easily be a savings account
[2] By 'same day standing order' I assume
.....under construction.... COVID is a [discontinued] scam
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Comments

  • isasmurf
    isasmurf Posts: 1,998 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Article in The Sunday Times today under the headline "Beware of catches on new Abbey current account".

    According to the article, the account pays 2.5% AER with a 3.5% bonus after 12 months for balances up to£1,000. Overdraft rate is 16.9%, but you can opt for a lower overdraft rate of 9.9% but if you do after 12 months you in credit interest rate drops to 0.1%.

    It is also a limited offer.
  • Milarky
    Milarky Posts: 6,356 Forumite
    Part of the Furniture 1,000 Posts Photogenic
    Yes, agree that going over balances of £1000 on the Abbey current account - even for a few days as the money is turned around - is wasteful. There is no way around the need [under this suggestion of 'revolving' payments] to return the balance of the amount [of £250] needed for the FRMS and not used for other things [eg withdrawals at ATM, payments, other standing orders] whence it came. There are variations, but this one trys to maximize the in-credit balance on the c/a [first £1000 at 6pc] at all times. You could work this out on the assumption that:

    Lost interest days: 4 [2 going and two coming back] @ 4.75pc - the 'ING rate', say.
    Lower interest days: 0 on £750 returned [assuming money is 'returned' 2 working days after being sent and payments 'cross' and canel out
    Lower interest days: 3.5 approx on £250 forwarded to FRMS. This is based on the fact that the SO amount always would go out on a fixed date, since it's between Abbey accounts, whereas a Monday departure date will vary in relation to this be up to a week.

    So That comes out at about: !! 4.75pc x 4 days x £875[1] + [4.75 - 2.5]pc x 3.5days x £250 } divided by: !!365 pays x 100pc} times 12 months - about £6 gross interest.

    Whereas £1000 x 6% = £60, and £1500 [av. balance on FRMS] x 6% = £90

    If, instead of £150, the gross interest on £2500 av. balance is £144 instead that would equate to 5.76%.

    [1] It's '875' because that's '1000' going and '750' back
    .....under construction.... COVID is a [discontinued] scam
  • Hobo_2
    Hobo_2 Posts: 286 Forumite
    Hi,OP link article say "Abbey account must be your main current account" to get the rate you probably have to transfer DD / SO as a condition!
  • MarkyMarkD
    MarkyMarkD Posts: 9,912 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    That can't be a condition - nobody has to have any DDs or SOs on their main account.
  • That can't be a condition - nobody has to have any DDs or SOs on their main account

    Abbey have told us that you have to switch DDs/ SOs from what you currently consider to be your main account. Any DDs you have coming out of other cirrent accounts can remain untouched.

    Having said that, there are still much better options than this account.
    Former MSE team member
  • Dagobert
    Dagobert Posts: 1,625 Forumite
    I understand that you only get the account if you let them do the switching.

    1) But do you have to switch all DDs/SOs/Bill Payments? Or can you select some off the list?

    2) Do they insist on closing the old current account for you?

    3) I read somewhere it's for new customers only. Does that apply to savings account customers, too?
    Dagobert
  • Afahmaep
    Afahmaep Posts: 296 Forumite
    Part of the Furniture Combo Breaker
    At last. A possible use for my duplicate A&L current account.
    Back in August 2004 I applied for an upgrade to their Premier account but was given another identical current account. I've kept it on for just such a scenario as this.
    At that time A&L were paying 5.35% on balances up to £25k so I had another reason not to get rid of it.
    Old Saying Once bitten twice shy
    Modern Saying Once Sh*t on Twice Bye!
  • Abbey have recently introduced a 6% Fixed Rate Monthly Saver account for existing current a/c holders, yet you cannot apply online - must be by post, phone or in branch. They are insisting people send in proof of ID - bank statements etc.
    Surely this is a mistake ? If you have to have a current a/c to qualify why on earth do they need proof of ID ? I've banked with them 38 years... can I cynically suggest they are trying to put people off applying, merely making the offer to counter the 7% similar a/c available to new customers only ??
    am I missing something ??
  • Dagobert
    Dagobert Posts: 1,625 Forumite
    They are insisting people send in proof of ID ... I've banked with them 38 years... can I cynically suggest they are trying to put people off applying
    They are legally required to request proof of ID, even for existing customers.
    Dagobert
  • Milarky
    Milarky Posts: 6,356 Forumite
    Part of the Furniture 1,000 Posts Photogenic
    Dagobert wrote:
    They are legally required to request proof of ID, even for existing customers.
    Really? who wrote that law? It makes sense to be sure that a given existing customer is giving their bank a particular instruction - or that they produce some proof of entitlement when withdrawing cash [a passbook or card] and demonstrate this in some way [entering a PIN or signature] but verifying that an existing customer is who they have previously accepted them as being is pretty silly even by GB's standards. With bank's application of 'money laundering' rules all being slightly differently applied in practice - and with their reckless approach to lending in general - you do get the sense that this is more 'health and safety' than 'money safety'.
    .....under construction.... COVID is a [discontinued] scam
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