Query on "fixed term deposits"

Hi there,

what's your opinion on "fixed term deposits" pls? For example, I see that Anglo Irish Bank gives you 4.11% on your capital if you "lock" the sum for one year... But wouldn't this become a bad choice in case the ECB will raise the percentage rate with impact on all variable rates of the "lump sum savings accounts" with no need for fixed term?

Thank you for your opinion

Don't forget that inflation is c. 5.2% [broken link removed] so any deposit rate of less than c. 6.5% means that your money is actually losing real value over time.

Godfather said:

For example, I see that Anglo Irish Bank gives you 4.11% on your capital if you "lock" the sum for one year... But wouldn't this become a bad choice in case the ECB will raise the percentage rate with impact on all variable rates of the "lump sum savings accounts" with no need for fixed term?

Click to expand...

Yes. But nobody can predict future interest rates and not all demand deposit providers have an ECB based rate guarantee.

Godfather,

If you are looking for the best return on your lump sum from a bank account, it makes much more sense to use an online account with Rabo or Northern Rock. These banks give you a higher interest rate than Anglo, plus your cash in not locked in.

Rabo give 4.75% on the first 10,000, and I believe 3.7% after that. NR give 4.15% up to Eur 3m. (Check Financial Best Buys thread in case my memory doesn't serve me correctly). These banks also tend to respond to ECB rate increases quite quickly, and will generally pass on at least a portion of the rise.

A recent thread on the reliability/stability of these online banks highlighted the fact that both are in fact several times larger than BoI and AIB, and are thus extremely unlikely to have problems.

Thank you ClubMan + jrewing!

Hi Clubman, I know about the fact that the inflation rate is around 5% but in the past I got so "burned" by the stock exchange that I prefer to save my savings safely until I'll buy my own house (which is the best investment in my opinion...). :-(

Thanks a lot to you both!

ClubMan said:

Don't forget that inflation is c. 5.2% [broken link removed] so any deposit rate of less than c. 6.5% means that your money is actually losing real value over time.

Click to expand...

Just throwing it out there,but less mortgage interest rate increases it's only c. 2.7%.
So if you don't have a mortgage and have your savings on deposit,then your doing ok at the moment.

Fair point. 2.7% for me it is so!