NCBS 6.75% Index-Linked Cash ISA 26 July 2008 at 2:43AM edited 30 November -1 at 1:00AM in ISAs & Tax-free Savings 5 replies 3.6K views

Hobo_2

http://www.ncbs.co.uk/ncbs.asp

beingjdc

Wow, that looks like a hell of a bad deal!

Jonbvn

beingjdc wrote: »

Wow, that looks like a hell of a bad deal!

2.6% + RPI hardly looks like a bad deal?

Hobo_2

H`mm bit confused with this as they say 2.6% + 4.6% for over 7%
but the T&C pdf seem to say +% "difference" from start date!!

Have i got this wrong?

steady__eddie

Saw this last week and posted a query on another thread http://forums.moneysavingexpert.com/showthread.html?t=401374&page=43
post 844
I was interested in comparing ncbs and Leeds who do a similar thing index linked.
Milarky was good enough to provide an explanation which I could understand and is reproduced below.

"Both: Minimum investments £1000, Maximum investments £3600 + past years'

Leeds: 2 years (1 August 2008 - 31 July 2010)
RPI + 2.5% (recieve 0% if RPI in particular year is below -2.5%)
Partial Withdrawals/Transfers/Early closure? Yes - reduced rate on withdrawn amount in the year in question. Past year's interest is capitalised and cannot be lost
Further transfers in after permitted? Possible as the word does not rule this out (will certainly ask them this)

National Counties: 3 (and a bit) years (up to 30 September 2011)
RPI + 2.6%
Withdrawal?: No - results in closure
Early closure/transfer?: Yes, but"no Indexation interest paid" [works like the Leeds - but only 2.6% pa paid up until maturity] Past years interest in only at '2.6% pa (fixed)' ALL indexation interest goes up the swanney
Further transfer in? Not after initial period

On balance, I'm sticking with the Leeds option because the flexibilty is there (eg to withdraw/transfer to another ISA around August 2009 with minimal (or no) loss of interest This is not possible with National Counties - where your rate for the whole invested term drops right off. Remember that that term is also 3 years rather than 2.

Of course it is possible to split your pot between the two. If inflation fell to 0.1% or less (very unlikely!) the NC ISA would be better. But if that were to happen after a year you could dump the Leeds and get the previous year's inflation on top - not so wityh National Counties "

beingjdc

Jonbvn wrote: »

2.6% + RPI hardly looks like a bad deal?

Does really - RPI includes mortgages, so - either the bank of england are going to be responsible, keep interest rates up, inflation falls, 2.6% + RPI works out around the 5% mark, or they're going to cut interest rates, inflation stays up, but RPI falls substantially.

Good if we do get hyperinflation I guess, but sticking a bit of your equity ISA in gold and oil funds would be a better way of guarding against that, if you consider it likely. Also better than government index-linked bonds at the moment, certainly.