…or Northern Rock. ho ho ho

There has been zillions of stuff in the press of late about our friends Northern Rock.

They had the genius idea of rapidly increasing their mortgage business, and instead of using deposits as (a good part of) the supply of money to pay for the mortgages, they instead borrowed from other banks. Borrowing from other banks is normal, but doing it to such an extent was the thing that made Northern Rock different. They got all their eggs and placed them all in a basket. Only they kept needing more eggs. And one day there was no one to give them more.

Why am I writing this? I have an ISA with Northern Rock. Had it for years, back when they were at the top of the various broadsheet ‘best ISA’ tables week after week. For years their interest rate has been crap. I keep meaning to move. Will do it tomorrow.

I had no intention of moving my money when they ran in to trouble. For one I saw that my money was safe (I have less than the £30,000 barrier, above which you only get a % of your cash back should your bank go bankrupt, in fact close to £30,000 less!) Secondly I saw it as a very short term thing (I was wrong).

But now I am thinking of moving. Why?

• They sent me a letter recently. To reward me for my loyalty I was to get a better interest rate! Only it lasted only about a month, and was less than 1%. And, it would still be less than most other high street rates.
• They also sent me a letter to invite me in for a chat to see if there were any extra services they could offer me. I got the impression this was an automated circular – nothing to do with their troubles – coming at the time it did it almost seem amusing: We may be falling apart, but hey, come and move your business to us!
• Several years a go I moved flat. This involves walking from bank to bank to inform them of change of address. It includes fighting with the member of staff that I don’t want house/contents insurance (no is not good enough) at every bank. But, they were all fairly helpful, adding the address to their system (on a screen which I could see as they typed to correct any mistakes). They could set the exact date and all offered to put ‘holds’ on so that no letters would be sent out between set dates around the move to avoid any letters going to the wrong place too early/late. Nice. All except Northern Rock. When I told them the people behind the counter (it is always empty so you have all the people behind the counter dealing with your reqauest) said gosh, we can do something about that! Oh, but I haven’t moved yet, moving on the 5th. They faces sunk. This was something highly unusal. Eventually they got over the big office diary. They found the right day and wrote carefully that Mr Keene was moving today to ….! No computer. No hold or fancy features, just a diary and pen.
• Best of all. I was curious how much money I had in the account. I had paid in a small amount for years, plus interest. They have no online facility, and are open limited hours (bless), but I finally got around to going in while it was open with my passbook. The guy was happy to just take my passbook and get the new amount on it. Then he frowned. Ah, the computer says it has so many updates to do to your passbook that it can’t cope and wont do it. I’m going to have to do them by hand, you just haven’ been in for so long. Now, I’m guessing here, but surely it is not that unusual for savers to set up a standing order and do no other activity with the accont for years. They took my passbook (and, to be fair, wrote down my balance on a bit of paper for me). When it came back through the post many days later, some poor sole had to write row after row (I’m guess 60-90) each one a ‘transaction’, even though they were all indentical, the same amount going in on the same day each month (and the odd yearly interest). It was amazing.

Of course the biggest reason to move is that they interest rates are poor. But they are a joke. I want to move somewhere where I can do all this online. Check my balance, move money in and out. Etc.

Nationwide and Egg both offer good interest (and I’m with both, the fewer companies that have my details the better), but Nationwide offer the facility to move an ISA from another company to them, so i will probably go with them.

As for Northern Rock. Bless.