# PTSB Launch new 3.46% Term Deposit Product with "pre-paid interest"



## Lightning (24 Aug 2010)

The Irish Times are [broken link removed] that PTSB have launch a totally new and innovative term deposit product ..



> PERMANENT TSB is hoping to attract more savers to the bank with a new fixed-term deposit account that pays the interest at the beginning of the term.
> The bank said the move is part of its strategy to increase its retail deposits.
> The 12-month Interest First Savings Account *pays the interest within a month of opening the account*.


 
The rate paid is *3.46% AER* according to the Irish Times ... or is the rate higher again? If interest is paid in month one then is the effective interest rate much higher? or is this included in the '3.46% AER' rate? 

I have sent an email to PTSB requesting their full T&C's for this product and asking them a few questions about how this product works.


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## dewdrop (24 Aug 2010)

It is indeed a novel way to attract funds and it will be interesting to see how competitors will react. My immediate feeling that once the novelty wears off a better rate will be more appealing as most people with deposits say in excess of 20k are not interested in getting the interest up front. Maybe i am wrong in thinking this.


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## Lightning (24 Aug 2010)

Maybe some people won't be bothered but if I have 20k on deposit, I would much rather having 'use of interest funds' now rather than in a years time.


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## Lightning (24 Aug 2010)

Permanent TSB have updated their website with this product [broken link removed]. 

There is a large difference between the gross rate and the AER rate. The gross rate is 3.35% and the AER is 3.46%. 

This makes me think that PTSB are somehow including the "upfront interest" in their AER calculation. Is this fair when the funds will/may sit outside the account?


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## sunrock (25 Aug 2010)

CiaranT said:


> Maybe some people won't be bothered but if I have 20k on deposit, I would much rather having 'use of interest funds' now rather than in a years time.


 
Well you could take the interest from your 20k right now and  invest the rest in a high interest account and get the interest on that at the end of the year.So in essence it is no different than a 1 year fixed interest rate .It is basically a gimmick.
The real question is the actual interest rate which appears competitive enough.


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## mark123can (27 Aug 2010)

sunrock said:


> Well you could take the interest from your 20k right now and  invest the rest in a high interest account and get the interest on that at the end of the year.So in essence it is no different than a 1 year fixed interest rate .It is basically a gimmick.
> The real question is the actual interest rate which appears competitive enough.



at the moment it probably is competitive enough  ,its a novel idea ,paying interest at the start of the term and im sure it will draw them in more punters 

its always going to be better to be paid the  interest in advance so you can invest it in something else providing the rates dont drop as a consequence


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## sunrock (1 Sep 2010)

Why is it better to be paid the interest up front?The bank will just take it from your capital anyway....I mean ,you could do that yourself.


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## Tentman (15 Sep 2010)

sunrock said:


> Why is it better to be paid the interest up front?The bank will just take it from your capital anyway....I mean ,you could do that yourself.


 The T & Cs of this particular product dont allow any withdrawals.


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## Bobby1 (16 Sep 2010)

CiaranT said:


> Permanent TSB have updated their website with this product [broken link removed].
> 
> There is a large difference between the gross rate and the AER rate. The gross rate is 3.35% and the AER is 3.46%.
> 
> This makes me think that PTSB are somehow including the "upfront interest" in their AER calculation. Is this fair when the funds will/may sit outside the account?


 
I rang PTSB about this, and they said the calculation is based assuming you take the interest and depoist that in another account that would be paying a gross rate of 3.35%. I argued that in order for me to do this I would have to earn a min of €10k in interest to open a second ac with PTSB, and I felt it was misleading, the lady said this was how they were working out the AER. Assuming most people who get their interest may spend it, is in not wrong to quote the higher AER when it appears its not acheivable, unless the interest was deposited into a similar fixed ac at the same rate of 3.35%?


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## sunrock (17 Sep 2010)

Tentman said:


> The T & Cs of this particular product dont allow any withdrawals.


 
Lets say you had 10,000 euros to invest in this product, so you go in to PTSB and they hand you back the presumably interest of approx 346e gross minus tax, so you might get back approx net 260e.
Now lets say that just before you set foot in the bank, you put the 260e in your pocket and went into a bank to invest 9740e ,any bank with good rates would do...would you be any worse off.
Now if ptsb gave you interest up front and at the end of the term, that would be interesting.


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