Buying premium bonds on credit card

paulcraigd

I want to take advantage of a credit cards 0% interest rate for purchases. Does anybody know of a credit card that will allow the purchase of premium bonds at 0% interest.

Would a credit card co class buying premium bonds as a 'money transfer'?

Galstonian

You can't, you need to find one which will let you transfer the money to a current account first (Egg). Premium bonds are not the best investment if you want a return but are good if you want to take the chance of hitting a big win. You lose out on at least one month as they do not immediately go into the draw and the average return is less than instant access accounts, its been discussed here, the Motely Fool and stoozing.com

Stonk

The answer to the original question is no, you cannot buy PBs with a credit card.

I don't see the need for the rant against PBs though, given the OP has decided to buy them and wasn't seeking an opinion about whether this is a good idea. Somewhat misleading it was, too, as the average return from PBs is not necessarily less than that of an instant access account. A higher rate taxpayer needs a rate of 5.00% to beat the average return from PBs, which one cannot get from an instant access account these days (except ICICI, which I disregard as a result of bitter experience; given their speed of doing things I wouldn't call it instant access anyway). Those few accounts which pay more than 5.00% do so only slightly, and in the form of a limited-time bonus rate, whose benefit is wiped out when you lose a few days' interest withdrawing the money when it expires.

Thefunkygibbons

There can also be a problem buying them online with a debit card

My cahoot account treats such purchases as cash so there is a £500 daily which meant my investment bounced

If you are going to buy, buy at the end of the month

Galstonian

Stonk wrote:

I don't see the need for the rant against PBs though

Hardly a rant, just pointing out that the return is not guaranteed, that the average doesn't usually beat a deposit account even for higher rate tax payers mainly because your bonds only go into the draw after you have held them for at least one full month, worst case that is almost two months of your interest free borrowing is doing nothing but waiting to beome eligible for a draw. You may also miss a draw at the end of the interest free period when you have to pay back the CC. It is highly unlikely you get the average return, the mean is heavily skewed by the effects of the 2 £1million pound prizes. If you hit it lucky the returns obviously far outweigh other investments.

For the record I have nothing against PBs but would suggest that anyone buying them should know what they are buying and why.

Best of luck to the OP

R00STER00

Galstonian wrote:

It is highly unlikely you get the average return, the mean is heavily skewed by the effects of the 2 £1million pound prizes.

I would be surprised if this were so as even £2m is probably not much compared to the prize pot. Do you have any facts to support this?

Thefunkygibbons

In my opinion PBs are a good addition to a balanced portfolio of savings, first Cash ISA, perhaps an index trader ISA, some instant access savings

However, the annual return is not guaranteed but over the longer term, they are a reasonable return

charlieboycat

Stonk wrote:

Those few accounts which pay more than 5.00% do so only slightly, and in the form of a limited-time bonus rate, whose benefit is wiped out when you lose a few days' interest withdrawing the money when it expires.

Can get 5.25% with Cahoot or with AA. Assume £50k invested for 6 months - the extra 0.25% = £62.50. Lost interest (at 5%) whilst funds are in transit on withdrawl = £6.84 per day. Time the withdrawal right and the most you should lose is 3 days interest on each = £20.52. With £50k you make £40+ (before tax) - but the principle is the same whatever the amount involved. I for one have no objection to making the extra.

Stonk

Galstonian wrote:

Hardly a rant, just pointing out that the return is not guaranteed, that the average doesn't usually beat a deposit account even for higher rate tax payers mainly because your bonds only go into the draw after you have held them for at least one full month, worst case that is almost two months of your interest free borrowing is doing nothing but waiting to beome eligible for a draw. You may also miss a draw at the end of the interest free period when you have to pay back the CC. It is highly unlikely you get the average return, the mean is heavily skewed by the effects of the 2 £1million pound prizes. If you hit it lucky the returns obviously far outweigh other investments.

For the record I have nothing against PBs but would suggest that anyone buying them should know what they are buying and why.

Best of luck to the OP

I agree that owning PBs for a short period of time is not sensible because of the slack time at the start and end. Buy right at the end of a month (but don't cut it too fine), and you'll only have a bit over a month of slack time.

My comments were about PBs in general. People are often quick to discount them for having a poor interest rate, whereas this is simply not true for a higher rate taxpayer. As has been indicated, they can be beaten, but only just and the only way is to use accounts with bonuses, closing and shuffling cash 6-monthly, and cutting transfer times very fine - which is just too much work for many people.

Galstonian

I think this is getting bogged down in different issues. The OP wanted to 'stooze' using PBs. This is generally not the best use of such funds because of the time constraints. PBs are (as has been stated) a reasonable addition to a balanced portfolio but that discussion should be taken to the savings and investment boards, this is the credit card forum.