ns&i index linked certs versus icesave 7.06%

martinman3

noh wrote: »

Not so. If you end a fixed rate deal early, with Kaupthing Edge, you will receive interest at the break rate. This rate is currently 1% gross less than the rate earned if left to end of term.
T+Cs here http://www.kaupthingedge.co.uk/Includes/PDF/tandcs.pdf paragraph 22.1.2
Interst rates here http://www.kaupthingedge.co.uk/our-products/interest-rates.aspx see note at bottom.

I stand corrected, I spent too long as it was looking at that website and never found the penalty for early withdrawal. It gives this an advantage over Icesave if interest rates increase before maturity.
Personally, I don't like those T&Cs as I am sure they could be interpreted in more than one way.
It says

b) On the date of closure ("Deal Break Date"), the original Deal will be cancelled and replaced by
another Deal ("Replacement Deal") for a revised Deal Term commencing on the date that the

original Deal was set up and expiring on the Deal Break Date.

so old deal cancelled, new deal created.
and

22.1.2 Fixed Term, Broken Deal

[FONT=Arial,Arial]a) Interest Calculation [/FONT]
[FONT=Arial,Arial]Interest will be calculated on the Deal Amount at the Deal Break Interest Rate for each calendar day from the [/FONT]
[FONT=Arial,Arial]Deal start date up to (but not including) the Deal Break Date. [/FONT]
[FONT=Arial,Arial]The Deal Break Interest Rate is fixed throughout the Deal Term as detailed in the Interest Rate section of the [/FONT][FONT=Arial,Arial]Website.[/FONT]

The part highlighted only says that the deal break interest rate applied during the new deal is fixed but it does not say if the rate applied is that in force when the old deal was started or when the old deal was broken.

i.e. The deal break rate may currently be 1.0% less than normal but it could theoretically be changed to any figure including 0%, the T&Cs could be interpreted in this way, and that rate would apply on early closure.

noh wrote: »

The same is true of any account that pays interest at maturity it's not something that's peculiar to Icelandic banks.

Yes but most banks/building societies don't do it and, considering the extra risk involved with an Icelandic bank, my original comment stands.

Lavendyr wrote: »

Where are you getting that figure of 2.8% from? RPI had actually fallen lower currently than it was a year ago (March 07 it was 4.8%, March 08 it was 3.8% and June 08 was still only 4.6%, just 0.2% higher than it was in June 07). I've just looked here : http://www.incomesdata.co.uk/statistics/rpitable.htm and it certainly doesn't seem to indicate a 2.8% jump in the last six months.

RPI is the index not the percentage, the annual percentage is calculated from the change in the RPI.
If you take the RPI in Dec 07 (210.9) and that 6 months later in Jun 08 (216.8).
Increase is (216.8 - 210.9) x 100 / 210.9 = 2.797%

You could get a very rough idea of what the annual RPI rate will be in Dec 08 by doubling that, approx 5.6%.

ManAtHome

You can have interest credited to you r bank monthly or annually with most if not all Icesave accounts.

NS&I are marginal at RPI + 1% for a basic rate taxpayer - IMHO only worth considering if you're close to the basic/higher-rate boundary. Last lot of NS&I certs I bought were RPI + 1.35% - may get back there yet, the + 0.25% and +0.75% seem to have tanked...

Also have a look at Scarborough B/S - they have a 6.5% ish instant-access fixed rate for a year - useful if you're not sure whether you'll need the dosh (or suspect better rates may be approaching).

noh

The part highlighted only says that the deal break interest rate applied during the new deal is fixed but it does not say if the rate applied is that in force when the old deal was started or when the old deal was broken.


i.e. The deal break rate may currently be 1.0% less than normal but it could theoretically be changed to any figure including 0%, the T&Cs could be interpreted in this way, and that rate would apply on early closure.

When you open a fixed rate deal with KE both the rate if kept to maturity and the deal break rate are fixed and stated at the outset.

Nigel

Lavendyr

martinman3 wrote: »

RPI is the index not the percentage, the annual percentage is calculated from the change in the RPI.

I am aware of that. If that is what you meant, I misunderstood your original post, my apologies.

martinman3

noh wrote: »

When you open a fixed rate deal with KE both the rate if kept to maturity and the deal break rate are fixed and stated at the outset.

Nigel

You seem very certain about this.
Do you have one of these accounts and does the statement/certificate you receive actually state the deal break rate you would get for early closure ?

If it doesn't and the deal break rate shown on the website is changed in their favour before maturity these T&Cs as they stand would not help you.

noh

martinman3 wrote: »

You seem very certain about this.
Do you have one of these accounts and does the statement/certificate you receive actually state the deal break rate you would get for early closure ?

If it doesn't and the deal break rate shown on the website is changed in their favour before maturity these T&Cs as they stand would not help you.

Yes I do have an account, opened today, and yes the online statement quotes the deal break rate.
Screen shot below

martinman3

noh wrote: »

Yes I do have an account, opened today, and yes the online statement quotes the deal break rate.

Many thanks for explaining that.