Cahoot and Alliance & Leicester

smudgie2

I have a Cahoot Acc (opened between June 04 and Sept 04) which is paying 5.30% on balances up to 50K and 4.80% on balances above 50K and up to 250K. Have given some thought to the the new Bonus Account offereing 5.25% on the first 6 months. I have now opened this account with Cahoot as it appears that not only can I do better by moving 15K + from Alliance and Leicester (whos rate has dropped from 5.35% since opening my account to a current 4.75%) 15K being the quailfying band for the 5.25% rate but.... when the six monthbonus period is over I can bounce it across into original Cahoot account and still get 4.80%. Are my assumptions correct ? or is there something I am not seeing that would make it all pointless.

Milarky

A quick estimate is that you will only benefit once you have moved £30,000 into this new account.

1) The first 15K at 4.25% [that's 0.5% below A&L and similar accounts]

2) The next 15K at 5.25% [that's 0.5 above the A&L rate]

'2' exactly compensates for '1' - You'd get the same interest on the first 30K whichever account you use.

However, how long do you think that cahoot's 5.3% rate will stay wher it is? I would not rely on being able to go back to that later.

As a 'backstop', you could open this account with a six-months rate guarantee, but move all the A&L money into the 5.30/4.80 rate now - on the assumption that it will disappear somtime during this period and the retained rate on the newer account may then be better.

If you have additional amounts of less than £33,333.33 to move then the existing account [with £1 to open a new account] is as good [but not better, really, than leaving it with A&L] whereas if you have considerably more than this to move the new account averages out better. And - IF you already have more than £50K sat in the old account - it also makes sense to sweep any of this margin back into the new account [top slice money at 4.80 -> top slice money at 5.25] anyway.

smudgie2

Thanks so much Milarky for your reply.
I had spent quite some time looking at this offer from Cahoot and was somewhat confused regarding the tier rates. Found the previous thread on 'Cahoot Offer 5.25%' equally confusing until the entry of Charlieboycat of 1.10.05 confirming that £15k and above in the account qualifies for 5.25% on the whole balance.
Logged into Cahoot and it is there on the listing of interest rates. So...
If I am correct, who knows ! and to answer your questions -
I do have 50K in the Cahoot account earning 5.3% and a further 3K earning 4.8%. Have the max £25K in Alliance and Leicester (moved the annual interest out on Sept 1st as it earns nothing)
My intention is to move the entire amount in A & L, bar a £1 to keep it open, into the new Cahoot account for the six month offer period. Would also move across the 3K in the 4.8% tier of the account I already have.
Who knows how long the Issue 1 Cahoot account will stay at the current rates of 5.25% and 4.8% ?
I feel it is worth doing, again assuming that I am correct.
Thanks again for your reply would be ijnterested in any further comments.

Milarky

From your correction on the rate - being 5.25% on the whole balance when you have more than 15K in the account, smudgie2, I'd say you are on the right lines...

..move the entire amount in A & L, bar a £1 to keep it open, into the new Cahoot account for the six month offer period. Would also move across the 3K in the 4.8% tier of the account I already have

The general observation here, is the value in keeping 'old' accounts open with nominal balances which are no longer available to existing customers . This new 'trick' by banks, like A&L, is something we need to be more conscious of..

smudgie2

Thanks Milarky and take your point about retaining accounts with £1 and deny them to others. Arguably how many do you need for the just in case scenario ? particularly as I hold an ING account with the same rate of 4.75% as A & L. Willl empty the account and close it.
Thanks so much for your input.

smudgie2

Please ignore my last message - think I missed the point completely ! Not the sharpest knife in the block eh !

charlieboycat

Milarky wrote:

The general observation here, is the value in keeping 'old' accounts open with nominal balances which are no longer available to existing customers . This new 'trick' by banks, like A&L, is something we need to be more conscious of..

What is your conclusion Milarky? That it is worth keeping old accounts open with £1? Or that they should be shut? And what's the reasoning?

smudgie2

I too would be interested Charlieboycat as I felt I had completely misunderstood what Milarky was saying. That may indeed be true.

Milarky

charlieboycat wrote:

What is your conclusion Milarky? That it is worth keeping old accounts open with £1? Or that they should be shut? And what's the reasoning?

Well, it's strange when you consider that 'discontinued' accounts have for a long time been the ones to close first - since they were made steadily worse compared to 'new' accounts that replaced them. [Isn't the Halifax 'Liquid Gold' the classic example?]. Now, [one or two] newer accounts are less good than the ones they replace. I would add, that this seems to be an internet phenomenon, whilst old-style 'discontinued' accounts will nearly all be passbooks types.

[It was more an observation than a firm recommendation, really]

charlieboycat

Thanks Milarky. I can't make my mind up which to do with the internet ones (I have several that now only have £1 in them). The existence of such an account makes one an "existing customer". On the one hand this would make it quicker/easier to open a new account (no ID proof requirements etc) and to get money into it if they introduce an attractive one. But on the other hand, being an existing customer may make one ineligible for that attractive new account!