Natwest 3 year Savings Bond

vaporate

Morning Members,

I will give a little background info about me first, some info will be irrelavent.

Firstly I'm aged 23, recent university graduate and only just been able to save. Finished university 2 months ago and still looking for full time employment. (only jobs going are sales).

Anyway down to business:

So far I have saved £1020 in a Natwest Cash ISA. I am aiming to raise £5000 in order to put into a Natwest 3 year fixed savings Bond.


Monthly Interest
When you place £5k+ in the Bond you’ll receive
2.96% Gross/ 3.00% AER in year 1 – monthly interest only.
3.93% Gross/ 4.00% AER in year 2 – monthly interest only.
4.89% Gross/ 5.00% AER in year 3 – monthly interest only.

This will sound naive but I would rather stick with Natwest despite the possibility of better offers elsewhere.

Anyhow, what are the benefits of having a 3 year Bond over a Natwest Cash ISA, apart from not having access for 3 years?

Regards

p.s As you can tell I'm rather new to all this so after public opinion.

fullstop

Yes you can get better rates elsewhere.

You will be paying tax on your bonds unless you are a non tax payer, but with the ISA all interest is tax free

bobcurtis

vaporate wrote: »

Morning Members,

I will give a little background info about me first, some info will be irrelavent.

Firstly I'm aged 23, recent university graduate and only just been able to save. Finished university 2 months ago and still looking for full time employment. (only jobs going are sales).

Anyway down to business:

So far I have saved £1020 in a Natwest Cash ISA. I am aiming to raise £5000 in order to put into a Natwest 3 year fixed savings Bond.


Monthly Interest
When you place £5k+ in the Bond you’ll receive
2.96% Gross/ 3.00% AER in year 1 – monthly interest only.
3.93% Gross/ 4.00% AER in year 2 – monthly interest only.
4.89% Gross/ 5.00% AER in year 3 – monthly interest only.

This will sound naive but I would rather stick with Natwest despite the possibility of better offers elsewhere.

Anyhow, what are the benefits of having a 3 year Bond over a Natwest Cash ISA, apart from not having access for 3 years?

Regards

p.s As you can tell I'm rather new to all this so after public opinion.

Once you take money out of an ISA you can not replace it, that years allowance is gone forever. You should be able to get a 3 year fixed rate ISA to almost match what Nat West are offering. Remember, 5% interest is only 4% after tax, so an ISA at 4% is the same rate, but you still keep the money in an ISA. Hope this makes sense, I know what I mean!

http://www.nationwide.co.uk/savings/cash_isa/cash-isa.htm

Nationwide has 3.75% ISA for 3 years

nilrem_2

bobcurtis wrote: »

Remember, 5% interest is only 4% after tax, so an ISA at 4% is the same rate,

Just to point out that it may depending on vaporate's tax situation, they may be able to get interest paid before tax is deducted or claim some back depending on personal tax allowances etc.

As others have said though once you cash in a ISA you have lost it's tax free status for ever, ATM ISA rates are poor but in the future when they are higher and perhaps your tax position changes their tax free status may be well worthwhile.