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  • FIRST POST
    • Arian Woman
    • By Arian Woman 18th Apr 17, 7:45 PM
    • 20Posts
    • 17Thanks
    Arian Woman
    Fixed Bonds
    • #1
    • 18th Apr 17, 7:45 PM
    Fixed Bonds 18th Apr 17 at 7:45 PM
    I am considering taking out a 3yr fixed rate bond with Vanquis. The offer is for 1.9% gross for up to 250k max. I only have about 16k to invest but it's a lot to me.
    Whilst this offer is the best I can find, I haven't found anyone else recommending it in the forum, neither yay or nay, so I'm wondering if I've missed something.
    Any reassuring thoughts folks? :think
Page 1
    • teddysmum
    • By teddysmum 18th Apr 17, 7:49 PM
    • 7,503 Posts
    • 4,439 Thanks
    teddysmum
    • #2
    • 18th Apr 17, 7:49 PM
    • #2
    • 18th Apr 17, 7:49 PM
    You could easily stash that amount between some of the interest paying current accounts and regular savers, giving a much better rate.
    • EachPenny
    • By EachPenny 18th Apr 17, 8:27 PM
    • 700 Posts
    • 434 Thanks
    EachPenny
    • #3
    • 18th Apr 17, 8:27 PM
    • #3
    • 18th Apr 17, 8:27 PM
    You could easily stash that amount between some of the interest paying current accounts and regular savers, giving a much better rate.
    Originally posted by teddysmum
    ....and without needing to tie your money up for three years either.

    Completely agree with teddysmum.
    • greatkingrat
    • By greatkingrat 18th Apr 17, 9:18 PM
    • 17 Posts
    • 15 Thanks
    greatkingrat
    • #4
    • 18th Apr 17, 9:18 PM
    • #4
    • 18th Apr 17, 9:18 PM
    You might as well stick 3k of it in the new NS&I 3 year bond at 2.2% for a start.
    • Arian Woman
    • By Arian Woman 19th Apr 17, 12:00 AM
    • 20 Posts
    • 17 Thanks
    Arian Woman
    • #5
    • 19th Apr 17, 12:00 AM
    • #5
    • 19th Apr 17, 12:00 AM
    You could easily stash that amount between some of the interest paying current accounts and regular savers, giving a much better rate.
    Originally posted by teddysmum
    I have a current acc that pays interest providing I pay in 1k each month. I also have 4 saving accs that I pay the max into each month & an Isa that's not yet mature.
    No other funds for another current acc.

    The 16k was earmarked for this years Isa but I was thinking a 3yr bond would be a better option.

    ;You might as well stick 3k of it in the new NS&I 3 year bond at 2.2% for a start.
    by greatkingrat
    Iagree, this is sensible, I was so disappointed to see the 3k limit.
    • soulsaver
    • By soulsaver 19th Apr 17, 12:27 AM
    • 1,243 Posts
    • 403 Thanks
    soulsaver
    • #6
    • 19th Apr 17, 12:27 AM
    • #6
    • 19th Apr 17, 12:27 AM
    I have a current acc that pays interest providing I pay in 1k each month. I also have 4 saving accs that I pay the max into each month & an Isa that's not yet mature.
    No other funds for another current acc.
    Originally posted by Arian Woman
    You don't need other funds if you cycle the (c.1k) deposit around the accounts. The same 1k can qualify you for Nationwide, TSB, Sanatnder123, BoS, Club Loyds etc - even HSBC which requires 1700 pm.
    There are 24 bottles of beer in a crate. There are 24 hours in a day. Coincidence? I think not....
    • EachPenny
    • By EachPenny 19th Apr 17, 1:32 AM
    • 700 Posts
    • 434 Thanks
    EachPenny
    • #7
    • 19th Apr 17, 1:32 AM
    • #7
    • 19th Apr 17, 1:32 AM

    You might as well stick 3k of it in the new NS&I 3 year bond at 2.2% for a start.
    Originally posted by greatkingrat
    Iagree, this is sensible, I was so disappointed to see the 3k limit.
    Originally posted by Arian Woman
    It might be sensible, but probably only after making full use of other accounts paying higher rates for easy/limited access, without the need to lock the money away for 3 years or pay a penalty for withdrawal. It isn't as good a deal as the Government would like us to believe.

    As per teddysmum and soulsaver's posts, there are a whole range of current accounts which pay between 2 and 5% leaving you free to take the money out at any time and move it into regular savings, or anything else which comes along in the next three years paying more than 2.2%.
    Last edited by EachPenny; 19-04-2017 at 1:34 AM.
    • Arian Woman
    • By Arian Woman 20th Apr 17, 2:46 AM
    • 20 Posts
    • 17 Thanks
    Arian Woman
    • #8
    • 20th Apr 17, 2:46 AM
    • #8
    • 20th Apr 17, 2:46 AM
    I take my hat off to all you organised folk that are juggling bank / saving accounts.
    I've read the threads about doing this & indeed I did a fair bit of tarting to get rid of cr cd debt for both myself & partner.
    I have been juggling current & saving accounts albeit on a small scale (compared to some) 3 current (1 inactive) 7 saving ( reduced to 4 now) + Isa.
    I really just want to simplify things as I'm retired & health issues mean I don't want to be worrying about shifting monies around or the copious clutter that comes with it.
    I find it enough of a headache when an Isa or account plummets & a new one needs to be found along with the various conditions.
    Hence the 3yr bond seemed to suit better than an Isa.

    Re NS&I [QUOTE] EachPenny, It isn't as good a deal as the Government would like us to believe./QUOTE]
    EachPenny, Could you explain, please.

    I haven't looked into this further but I see on NS&I Vanquis site it says:
    up to 1.90 % gross/AER*
    Choose to invest from 1,000 to 250,000

    http://www.vanquissavings.co.uk/3-year-fixed-rate-bonds/

    Apologies. Amended to correct my mistake. I had put NS&I when should have put Vanquis.
    My brain is slower these days.
    Last edited by Arian Woman; 20-04-2017 at 4:18 PM. Reason: error
    • Arthurian
    • By Arthurian 20th Apr 17, 10:10 AM
    • 606 Posts
    • 530 Thanks
    Arthurian
    • #9
    • 20th Apr 17, 10:10 AM
    • #9
    • 20th Apr 17, 10:10 AM
    Here's the link to the 2.2% NS&I bonds.
    https://www.nsandi.com/Investment-Guaranteed-Growth-Bonds
    • EachPenny
    • By EachPenny 20th Apr 17, 11:59 AM
    • 700 Posts
    • 434 Thanks
    EachPenny
    I really just want to simplify things as I'm retired & health issues mean I don't want to be worrying about shifting monies around or the copious clutter that comes with it.
    It isn't as good a deal as the Government would like us to believe.
    by EachPenny
    EachPenny, Could you explain, please.

    I haven't looked into this further but I see on NS&I site it says:
    up to 1.90 % gross/AER*
    Choose to invest from 1,000 to 250,000
    Originally posted by Arian Woman
    Hello Arian Woman, I'm not sure where you found the 1.9% on 1000-250000 but I suspect it is for a different account which is no longer on sale... if it is still available can you please let us know which one it is please

    I wasn't being anti-government by my comment, the new bond is at least a recognition that something needs to be done to help people relying on savings. The problem is it just isn't enough. The main MSE site article on the bond draws a similar conclusion. The Government don't really want us to put money into NS&I, but for political reasons had to do something.

    The headline rate of 2.2% looks good on its own, but the account has a combination of limitations - you can only pay in 3000, it locks your money away for three years, it is online only.

    The online-only restriction should help the government meet it's main objective, in conjunction with the 3000 limit.

    It is good if you only have a small savings pot and want to put it somewhere you can forget all about it for three years. Or if you have a lot of savings and all the higher-interest options have been used up.

    But as an example, the Nationwide FlexDirect account pays 5% for the first year on a balance of up to 2500, 1% in following years. At the end of year 1, the 3000 in the bond will have earned 66 interest, 2500 in FlexDirect will have earned 125. But, you say, in year 2 FlexDirect only pays 1%, that's less than half the NS&I bond rate. True, but at the end of year 2 the bond will have generated a total of 133.45, whereas the FlexDirect account will have generated 150, and on a deposit of only 2500 rather than the 3000 put in the bond. Again, the FlexDirect account has some requirements including a minimum monthly pay-in. But as it is a current account you can set up a standing order to move 1000 to your main current account and another SO to move it back the next day. Once set up you can more or less forget about it.

    Year 3 is where the NS&I bond would overtake the FlexDirect account if you did nothing else. But there are other options for your money, and remember that there was still that 'spare' 500 which hopefully got saved somewhere useful too. The Flexclusive Regular Saver would be a good place to start.

    Running multiple current accounts and regular savers does involve some work, but the amount doesn't have to be that much if you do it by setting up standing orders to meet pay-in requirements and have enough direct debits as well. Being retired should give you more than enough time to do it

    Going back to your original post, if you have around 16k to find a home for, then 3000 in the NS&I bond is only going to make a small dent, and you will need to use some other options anyway. Locking the rest of the money away in a 3 year bond at a modest interest rate is a perfectly valid solution if that suits your needs, but there are other ways of making your money work harder with only a little extra effort and zero risk.
    • alanq
    • By alanq 20th Apr 17, 12:41 PM
    • 3,539 Posts
    • 2,269 Thanks
    alanq
    ...it locks your money away for three years, ...
    Originally posted by EachPenny
    There is a penalty for early withdrawal but at unlike most fixed term bonds the money is not locked in.
    I'm a Board Guide on the Budgeting and Bank Accounts, Savings & Investments, Food Shopping and Over 50s MoneySaving boards. I'm a volunteer to help the boards run smoothly, and I can move and merge threads there. Any views are mine and not the official line of moneysavingexpert.com. Board guides are not moderators. If you spot an inappropriate or illegal post then please report it to forumteam@moneysavingexpert.com
    • EachPenny
    • By EachPenny 20th Apr 17, 1:20 PM
    • 700 Posts
    • 434 Thanks
    EachPenny
    There is a penalty for early withdrawal but at unlike most fixed term bonds the money is not locked in.
    Originally posted by alanq
    True, but is this product really a 'bond' in anything other than name?

    Sorry, "locks" was a bad choice of word, my meaning was "ties up" (in order to earn the quoted interest rate). Several current accounts pay 2% with true instant access, so the benefit of an additional 0.2% interest comes with the potential penalty of 90 day's loss of interest. And if you had to withdraw in the first 90 days you may get back less than you 'invested'.
    • Arian Woman
    • By Arian Woman 20th Apr 17, 5:32 PM
    • 20 Posts
    • 17 Thanks
    Arian Woman
    Vanquis just dropped 3yr rate to 1.8%
    • Sean473
    • By Sean473 20th Apr 17, 5:51 PM
    • 54 Posts
    • 25 Thanks
    Sean473
    I am considering taking out a 3yr fixed rate bond with Vanquis. The offer is for 1.9% gross for up to 250k max. I only have about 16k to invest but it's a lot to me.
    Whilst this offer is the best I can find, I haven't found anyone else recommending it in the forum, neither yay or nay, so I'm wondering if I've missed something.
    Any reassuring thoughts folks? :think
    Originally posted by Arian Woman
    Never heard of them... Are they even legit?
    • cracker_jack
    • By cracker_jack 20th Apr 17, 5:57 PM
    • 26 Posts
    • 48 Thanks
    cracker_jack
    Oaknorth has a 3 year fixed at 1.91%, I've never actually heard of them before.
    • Arian Woman
    • By Arian Woman 21st Apr 17, 12:28 AM
    • 20 Posts
    • 17 Thanks
    Arian Woman
    Thanks EachPenny for a clear & well explained answer. Def food for thought.
    • EachPenny
    • By EachPenny 21st Apr 17, 6:02 PM
    • 700 Posts
    • 434 Thanks
    EachPenny
    Thanks EachPenny for a clear & well explained answer. Def food for thought.
    Originally posted by Arian Woman
    Thank you Arian Woman :blush:

    Just to be clear though, I'm not saying the NS&I isn't good for some people - I've opened one myself, but only because I have other money at 2% and below which I know will be enough to cover my investing/spending needs over the next three years, so the risk I'll need to take anything out of the NS&I 3k is minimal.
    • Arian Woman
    • By Arian Woman 22nd Apr 17, 12:50 AM
    • 20 Posts
    • 17 Thanks
    Arian Woman
    EachPenny, I also feel confident that I won't need to withdraw over the next 3 yrs. Annoyingly, they don't seem to want my money. After many attempts & various problems I've got to wait for their site to reset again. They tell me they are aware of the problem. Meanwhile did you notice that I posted Vanquis has lowered their rate?
    • EachPenny
    • By EachPenny 22nd Apr 17, 12:06 PM
    • 700 Posts
    • 434 Thanks
    EachPenny
    I also feel confident that I won't need to withdraw over the next 3 yrs.
    Originally posted by Arian Woman
    Sorry, maybe I muddied the waters in trying to make things clearer The relevance of the 3 years is about the possibility of getting a higher than 2.2% interest rate on the 3000 during the next three years, not necessarily about needing to use the money for something else.

    If you had the option of moving the money out of the NS&I bond to a different account paying more interest during the 3-year term then you have to pay a penalty of 90 day's interest, which means the effective rate you'll get is less than 2.2%.

    A current account - lets say BoS Vantage - pays 2%. That rate isn't fixed and could go down, but there is no penalty for withdrawal. So if the rate does go down, or something better comes along, you just move the money elsewhere. But you have 'banked' the 2% interest earned on the money in the time it is in the account, nothing will be deducted.

    So the best strategy is to find the account paying the highest rate (currently Nationwide FlexDirect) and fill that first, then the next highest rate and so on. In theory the NS&I 2.2% bond would come before the current accounts paying 2% - however because of the fixed-term you have to weigh the additional 0.2% against the potential loss of opportunity, or loss of interest.

    In my case, what I'm saying is that if things stay roughly as they are, then the way I have my money spread I think it unlikely that I'll have everything at 2.2% or above within the next three years, so there will be no urge to take money out of the NS&I bond before then. On the other hand, if rates improve to the extent that 2.2% looks bad, then I probably won't mind taking the 90 day loss of interest hit

    So the NS&I at 2.2% is good - so long as you have exploited all other options, and have sufficient money earning under 2.2% to mean the NS&I 3000 can remain untouched for the whole of the 3-year term.

    Hope that is a bit clearer.

    As for the Vanquis rate, I did notice the reduction. Unfortunately that is the way things seem to be at the moment - a good rate comes along, but doesn't stay there for long.
    • Arian Woman
    • By Arian Woman 23rd Apr 17, 4:16 AM
    • 20 Posts
    • 17 Thanks
    Arian Woman
    Sorry, maybe I muddied the waters in trying to make things clearer
    No, not at all, I understand the various scenarios
    I have the Nationwide 5% Flexdirect, 5% Flex regular saver, 2% Regular saver, Loyalty saver & an instant saver (last two not so good now) Flexclusive ISA & Nat West paying out on my utilities. A matured ISA that needs a new home, & some others I have consolidated as the rate had dropped.
    I've had accounts with various banks with benefits previously.
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