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Robert_Sterling_3

Discussion of user names should be confined to the Money Savers Arms forum. There you might be told that "a rose by any other name ... etc "

Jock-The-Cock

We have over 100000k in Northern Rock 5.10%,no Isas been members of Nationwide for 20 years,how would we benefit by opening Xmas bond or Isas.

Very confused we thought the more you have the more interest you have!!!!!!!!!!

deemy2004

I don't know why the last two of you are so averse to doing things by post ... I completed the application form online for my wife and posted it off and it's all set up.  Very efficient given Abbey's reputation.

She's off to open a Nationwide bond tomorrow

Don't want to risk my drivign liscence disappearing, if they have a local branch then I prefer to open it there, else distant accounts have to be opened by post.

MarkyMarkD

We have over 100000k in Northern Rock 5.10%,no Isas been members of Nationwide for 20 years,how would we benefit by opening Xmas bond or Isas.

Very confused we thought the more you have the more interest you have!!!!!!!!!!

A few points arise from your query:

(1) Tax

If you pay tax, it's far better to have an ISA up to the limit. 5.1% gross is around 4% net at 20% savings tax rate. You can get far more than 5% on an ISA and that's tax free.

(2) Comparing fixed and variable

You can't in general compare fixed and variable rates, exactly, as they aren't like for like. Current market projections are that rates will be pretty flat over the next two years - 2 year swap rates are 4.84% today IIRC - which means that the City thinks that rates will be similar to the current 4.75% base rate over that period. So, although you can't usually compare fixed and variable rates, they are pretty equivalent at the moment, over a 2 year term (or, in fact, a 5 year term).

(3) Nationwide deliberate loss-making

The Nationwide 6% bond is a deliberately loss-making product.

Nationwide could borrow this money over 2 years on the money markets at around 4.84%. But instead they are paying customers 6%, and incurring the admin costs of setting up the accounts. That's clearly loss-making.

But they are doing it as a members' loyalty thing.

So all things taken together, if you are a Nationwide 3 year member, and you can spare the money for 2 years (and DEFINITELY won't need it), you would be daft not to buy one of these bonds IMHO as you are getting well over the odds.