Bank’s word isn’t its bond over better interest rate

A. E. writes: I applied for a one-year bond with Birmingham Midshires yielding interest at 2 per cent. But then I received a letter saying a new bond had been opened several days earlier paying 2.75 per cent, so my money was being transferred to this and I was given a new account number.

A fortnight later a further letter arrived saying, oops, there had been a mistake. I would get 2.75 per cent for only 16 days, after which my bond would be closed and my money moved to a new account yielding 2 per cent.

I told the bank’s customer relations people I believed they had cancelled my original investment and offered me a new contract, which I accepted, so they should honour the agreement in black and white to pay 2.75 per cent.

The difference in interest over the life of the bond is £1,035. They have offered me £50 instead. THE first letter from Birmingham Midshires could not have been clearer. It told you that your application to invest £138,000 had been received and the money was on deposit earning 2.75 per cent.

The letter explained: ‘If you originally applied for our one-year fixed-rate yearly interest bond which offered tiered rates of interest up to 2 per cent gross, we have opened you a new account and invested your funds in our new product.’

What could be better than a bank that plays so fair with customers that it gives them the benefit of a new rate that is higher than the rate they expected? But what a shame Birmingham Mid- shires had to spoil things by trying to backtrack.

The bank says: ‘The error in rate occurred due to being incorrectly entered when the account was initially opened.’

This does not quite explain why you were sent a letter saying that although you had applied for the original bond, your savings were going into the new product.

No matter. I am pleased to say Birmingham Midshires will honour the higher 2.75 per cent rate, and you are even getting the extra £50 to make up for the inconvenience.