Lloyds Bank has clarified its savings rules following a customer’s concern about potentially being moved to a lower interest rate. The customer reached out on social media, asking: “When renewing advantage ISA and advantage saver, does that reset the three withdrawals? I know four or more means lower interest.”
The bank offers a 3.7% interest rate for both the Club Lloyds Advantage Saver and the Club Lloyds Advantage ISA Saver, with a limit of up to three withdrawals within the 12-month term from account opening.
However, exceeding this limit by making four or more withdrawals during the term results in a reduced rate of 1.05%, a significant decrease of 2.65%. In response to the customer, Lloyds Bank confirmed: “Yes, the withdrawal limits will reset when your accounts are renewed.”
Customers can hold up to five Advantage Saver accounts, allowing them to allocate funds into different pots for various goals. Withdrawals can be made either online or in branch, but online transfers are limited to existing Lloyds Bank accounts.
After the 12-month period, the account transitions to a Standard Saver with a current rate of 1.8%. The Advantage ISA is categorised as a flexible ISA, which permits customers to replace withdrawn funds within the same tax year without affecting their £20,000 ISA allowance.
Once the account matures after 12 months it transitions into an Instant Cash ISA, with a current rate of 1.6%. One concern for savers is that interest rates on their accounts might dip if the base rate shifts downwards again.
Rob Morgan, chief investment analyst at Charles Stanley, shared his view: “We believe a balance of policymakers will decide it is appropriate to take a further 0.25% slice off interest rates from 4.75% to 4.5% at the next meeting in February. If anything, the recent tightening in financial conditions, which pose clear downside risks to the UK economic outlook, reinforce the case for Bank of England easing in the Spring too.”
Encouraging savers to secure a high rate now, Mr Morgan said: “This inflation-beating rate of return is likely to narrow over time as the base rate moves lower. It may therefore be a good time to consider a fixed rate if you are happy to lock your money away because inflation and interest rate expectations may now fall back a little. A rate of around 4.5% is currently achievable for a one-year fixed term.”