Isa Versus Premium Bonds

STRAWB

I have 20k in a isa now with the rates i'm thinking of putting into premium bonds what do people think?

Reaper

Sounds like a terrible idea to me. Once you take it out of an ISA you can't put it back in when rates go up again.

Premium bonds pay 2.85% on average. You should be able to find an ISA paying that even after the cuts.

See Martins article on Premium Bonds here.

McKneff

i thought premium bonds paid no interest at all!!!
this is the Ernie thing were talking about isnt it or am i mistaken

STRAWB

no interest paid but worked out on average wins per year

McKneff

thanks for that, i have had my tenners worth for 40 years and havent had a
ha'penny

Reaper

Yes the amount they decide to pay out goes up and down in a similar manner to interest rates. Indeed they may decide to cut the payout rates since interest rates have been cut so severely, we will have to wait and see.

sabretoothtigger

Premium bonds are only good for high tax payers because the winnings arent taxable, any income is worth 40% more to them. Its actually limited to 20k worth I think or no doubt people would buy millions

Anyone else should just put lottery money in there instead perhaps

ManAtHome

Normally follows the BoE base rate with a month's lag, so prize pot could be down to equivalent of 1.3% per year - prizes cut by half from December...

More info here (although they only say rates may change from time to time) http://www.nsandi.com/products/pb/rates.jsp

StarRover

Reaper wrote: »

Yes the amount they decide to pay out goes up and down in a similar manner to interest rates. Indeed they may decide to cut the payout rates since interest rates have been cut so severely, we will have to wait and see.

I'll be surprised if they don't! The interest rate (used to determine the prize money available) they're using at the moment is only 2.85% so "you do the math" as our American cousins would say.

isofa

STRAWB wrote: »

I have 20k in a isa now with the rates i'm thinking of putting into premium bonds what do people think?

I suggest you read the main PB Discussion thread here: http://forums.moneysavingexpert.com/showthread.html?t=510305

And the PB Winners thread here: http://forums.moneysavingexpert.com/showthread.html?t=81778