# 300K deposit accounts ? Please help!



## mmmmm (21 Apr 2008)

Hey, i have 300k which I really don't know what to do with....I had it divided into 10k in AIB 7 day notice account at 5% and the rest (290k)at 4.5% (3 months fixed term) also in AIB. The three months are up now and I'm going to put it back for another 6 months when might buy a house.I rang around and bank of Scotland offered 4.95% on 3 months fixed term account and 5% on 6 months. AIB meanwhile will only go to 4.7%. What I'm wondering is (being a complete banking newbie) will my money be safe in Bank Of Scotland and is there anything else i should consider? Really appreciate any help! I was told to steer clear of online backs etc as "you can never contact them and there are hidden terms & conditions etc"....PS I don't want to do anything risky- I want to go own a safe guaranteed option....thanks


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## Satanta (21 Apr 2008)

mmmmm said:


> I was told to steer clear of online backs etc as "you can never contact them and there are hidden terms & conditions etc".


By any chance, were you told this by a member of staff in one of the highstreet banks? 

The "hidden" terms and conditions are all clearly laid out on each account and there is nothing hidden about them. Depending on which online account you might/are considering, you will find plenty of information on AAM and elsewhere to detail what other users have experienced as the pro's and con's of these banks.

With a figure as high as €300k you really need to be seeking out the highest possible return for your money (within your own acceptable risk) and not limiting yourself because of the hearsay of others who appear to be ignorant of the current economic climate (e.g. Rabo, one of the larger on-line banks opperating in Ireland, currently have one of the highest credit ratings available [AAA] and have a huge number of satisified customers with no "hidden terms and conditions".... although as of late the %'s on offer have fallen relative to the competition so wouldn't be my own choice for the €300k). 

If security is a big issue for you (which it appears to be) you should check out the multiple threads on AAM regarding security of savings. Currently, Northern Rock is probably the "safest" home for your money with 100% of your savings guaranteed by the UK Treasury. In general, with the Irish banks you're only guaranteed for 90% of the first €20k, so it's worth being aware of exactly how well you are covered.


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## mmmmm (21 Apr 2008)

Hey Satanta- thanks for your reply. You are absolutely correct- a mainstreet bank manager told me to steer clear of the online banks. I am shocked to hear most irish banks only guarantee 90% of the first 20k!! Does this mean if e.g. AIB got into trouble and my money was there that I could lose substantial amounts!! That makes me very nervous..... Its funny you mention northern rock because it was exactly all the problems there that made me nervous in the first place but now i find out they're the safest currently....as i said I'm a complete newbie to this and I feel very uncertain as to what to do....


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## Satanta (21 Apr 2008)

mmmmm said:


> Its funny you mention northern rock because it was exactly all the problems there that made me nervous in the first place but now i find out they're the safest currently....as i said I'm a complete newbie to this and I feel very uncertain as to what to do....


To be honest, everyone is relatively new to this so don't feel you're alone.

For the last number of years the idea of one of the "main" banks suffering any problems with security of deposits was a neglible concern which people gave very little thought to. In the current environment, it's becoming a very serious issue with people giving it a lot of thought.

As for "what to do", arm yourself with as much information as possible. A lot of threads on AAM have debated the concerns, so reading through these is a good place to start. I'd suggest  as a starting point. 

When you know the risks associated with each bank/institution, you can then make an informed decision on how to proceed. A balance between risk (how much of your saving is secured) and return (best available rate) will then need to be decided upon based on your own thoughts. 

Spreading your savings between a number of banks can help mitigate risks, but requires more work on your part. Saving with the "safest" provides more safety, but your returns (might) suffer as a result. Arming yourself with the information to make these decisions is the only way to make sure you are aware of the risks and make the best decision for your circumstances.


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## mmmmm (21 Apr 2008)

Thanks Satanta- I had a look through that thread- there is a some excellent information there. Personally, i'm more concerned with security than getting the best rates ...

I just had a glance at anpost but it seems there savings options are only really for longer terms (more than 3/6 months). Rabodirect with its triple A rating seems like a good bet but i'm thinking i'd be best off spreading the money around a number of accounts for a bit of security but unless i go account crazy the amounts will exceed the guaranteed 20k.... as you say, I need to get all the info and work from there and I think i've started in the right place....thanks again for your advice and help!


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## Satanta (21 Apr 2008)

mmmmm said:


> Personally, i'm more concerned with security than getting the best rates ...


In that case, the summary post by Brendan in that thread is pretty much exactly what you require. 

It ranks each of the options in terms of security. It doesn't take account of rates in the ranking, but does comment on them in order for you to make a more informed decision.

For security, NR is the best bet. Although, no harm in taking the advice on the thread and spreading a little just to be sure you have quick access in the event of any problems.



Brendan said:


> So there you have it! I'm leaving my cash where it is, in Northern Rock, with €40k in NIB & €20k in Rabobank, just in case it takes a few days to withdraw cash from NR. You get the best interest rates in the land and 100% capital guaranteed.


 


mmmmm said:


> I just had a glance at anpost but it seems there savings options are only really for longer terms (more than 3/6 months).


The Certs and Bonds are certainly for the longer term, but the 90 day notice account might be suitable in your case (it depends on how far in advance you know that you will require the sum on deposit). Personally, I'd stick with NR due to the higher return and less restrictive Ts&Cs on the account.


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## mmmmm (21 Apr 2008)

Sound advice- thanks Satanta!

One more question- if northern rock are being underwritten by Bank Of England and offer an unlimited cash amount guarantee, what would be the downside of putting all my money with them? Is the only reason people are saving/ investing elsewhere just for better rates?

Will Bank of England pull out of this role eventually?

Cheers


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## TSThomas (21 Apr 2008)

Have to agree there, Northern Rock'd be the quick & easy solution - 5% interest rate, 100% guarantee...

[broken link removed];
_The guarantee arrangements protect all savers, regardless of the amount deposited and apply to all existing accounts, all re-opened accounts and all new accounts. _
_They also cover all new deposits, all further interest payments and movement of funds between accounts and all term deposits, including Fixed Rate Bonds, for the duration of their term. _
_The guarantee arrangements will remain in place during the period of temporary public ownership and, as previously confirmed by the UK Government, *such arrangements would not be withdrawn without at least three months notice* in any event._
As regards how long this state of affairs will remain;

_Now in state hands, the Rock will also make a commitment later today that during 2010 it will have repaid all of the taxpayer-backed loan it has received from the Bank of England, which currently stands at around £24bn. Repayments have started and the loan is already about £3bn lower than it was at the end of last year._

_The new nationalised Rock will say that after the Bank of England loans have been repaid, it will relinquish the guarantees the Treasury has given to other creditors._


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## mmmmm (21 Apr 2008)

Cheers guys,

....Just stumbled across this....this article indicates that NR only guarantee savings up to 35,000stg ???


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## iggy (21 Apr 2008)

mmmmm said:


> Cheers guys,
> 
> ....Just stumbled across this....this article indicates that NR only guarantee savings up to 35,000stg ???


All deposits guaranteed regardless of amount...see their website.


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## HighFlier (22 Apr 2008)

If you have a mortgage or any other long term loan then use that bank. If they fail the money you owe them will be offset against the money they owe you.


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## mmmmm (24 Apr 2008)

HighFlier said:


> If you have a mortgage or any other long term loan then use that bank. If they fail the money you owe them will be offset against the money they owe you.


Hi HighFlier- I don't have a mortgage but thanks for the idea.

I've been thinking over my options over the last few days and I think i'm getting more confused!!! 

Originally i felt Northern Rock sounded like the best option but at the same time I have a niggling feeling in the back of my mind saying its a bad idea. I know they're 'guaranteed' but I'm not sure i trust this situation fully.

Right now I'm thinking about spreading the money over 6 a/c's- with a portion only with northern rock.

I like Rabodirect from the point of view of their AAA rating and their excellent internet security so although they guarantee only 40k I would be happy to save  a good bit more with them. Although I couldn't find them on standard and poors credit rating list (only found Rabobank USA Financial Corp. --/--/A-1+ ), why is this?

I would also use Ulster Bank (AA rated), AIB (A+ rated) and NIB (AA- & 40k Guarantee) and possibly halifax/ bank of scotland as although they're shaky with poor cds, they guarantee 90% of 50k. 

Effectively this would mean if all banks flopped I would have 215k odd guaranteed instead of currently only 20k. Biggest loss if biggest risk bank failed would be 30k....

Opinions welcome, preferably before I spontaneously combust thinking about all this! Also, is there any downside to opening loads of accounts? besides the work involved.... Thanks for advice!


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## mmmmm (24 Apr 2008)

I was just talking to someone in a bank who suggested that no irish bank will go bust....he said that the irish banks have come clean regarding their situation (on their loans etc) and the central european bank is willing to loan money.... he also said that its hard to call but that the worst was probably over....

Opinions?


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## Satanta (24 Apr 2008)

mmmmm said:


> I was just talking *to someone in a bank* who *suggested* that no irish bank will go bust....


More than a slight vested interest in suggesting this. 

Do remember, it was one of these great bankers who also said that you should avoid all online banks 

For my day to day banking I still use one of the mainstreet Irish banks (AIB) and while I would lose a few euro if they went bust, I feel the risk of this happening is low enough for it not to be a concern. 

If, however, I had €300k on deposit with them... I would take a very different view of the risks involved. 


The strategy of spreading the funds over six accounts is relatively sound (if you don't mind the work involved). It will require some additional work in keeping an eye on everything and making sure all transfers etc. go through as planned, but no reason for this not to be a way forward (e.g. no nasty hidden catches). Do be sure to check the full terms and conditions of any account you open (e.g. do you require another feeder account to set it up, do you need to have salary payments to the account, are there any fees for the account etc.). 

You could potentially look at a number of the high interest/regular monthly saver accounts out there which offer higher returns, but again, check the full Ts&Cs as many of the interest rates are only offered for limited periods and with considerable restrictions on the accounts. 



> ...I have a niggling feeling in the back of my mind saying its a bad idea. I know they're 'guaranteed' but I'm not sure i trust this situation fully.


Obviously, before you choose any account you should be 100% happy with the situation. Out of interest, what puts you off the current NR offer? It still does appear to be the best option both in terms of rate and security for your situation. 

[I should point out, though I have recommended the account in this situation, I don't actually hold one myself and can't comment on the flexibility/level of service/etc of the account]


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## mmmmm (24 Apr 2008)

Hi Satanta, thanks once agin for replying! 



Satanta said:


> For my day to day banking I still use one of the mainstreet Irish banks (AIB) and while I would lose a few euro if they went bust, I feel the risk of this happening is low enough for it not to be a concern.
> 
> If, however, I had €300k on deposit with them... I would take a very different view of the risks involved.


 
Thats how I feel about it! I would probably even leave 50k with AIB as I think their sound enough but I don't want all my eggs in one basket



Satanta said:


> Out of interest, what puts you off the current NR offer? It still does appear to be the best option both in terms of rate and security for your situation.


 
I don't really have an answer to that- i just have a funny feeling about it....but I think i will use them for what will still be a large amount but I don't think i'll give them the whole amount. I suppose once again despite the guarantees I don't really want to have all my eggs in one basket there either.

I think even opening 4 a/c's: 100k with Rabo, 100k with NR, 50k with AIB and 50k with NIB would be a much more secure situation than all 300k with one bank.....


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## mmmmm (24 Apr 2008)

Just a thought regarding why i am sceptical about Northern Rock....


Say i have money with them and then as stipulated in the agreement the Bank of England says savings will no longer be guaranteed in 3 months....won't everyone decide they want their money out and won't this cause another run on the bank?


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## TSThomas (24 Apr 2008)

It's a possibility but as reported _"Northern Rock has promised to repay its £24bn state loan by *2010 *despite warning that it would not break even for three years..."_ After the Bank of England loans have been repaid, _"it will relinquish the guarantees the Treasury has given to other creditors."_

The removal of guarantees still appears to be a long way away 

I signed up with Northern Rock early last year, remained through the run & beyond. Even during the run I was generally able to access the account when I wanted (Others here were less successful on that front though I believe). 

I do have accounts open with several other banks to take advantage of the varying high rates available though too. But beyond that I'm perfectly happy with NRs guarantees.


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## iggy (24 Apr 2008)

mmmmm said:


> Just a thought regarding why i am sceptical about Northern Rock....
> 
> 
> Say i have money with them and then as stipulated in the agreement the Bank of England says savings will no longer be guaranteed in 3 months....won't everyone decide they want their money out and won't this cause another run on the bank?


So what if there is a run on the bank....u still get your money....guaranteed!


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