MSE News: The seven deadly sins of premium bonds

dougz_2

lvader wrote: »

Name a savings account that lets you withdraw your monthly interest without penalty and gives 3% per annum year in year out without having to move?

With PBs you cannot withdraw any interest, you only get a measly 1.5%, and to add further insult you are then forced to gamble it on a silly slot machine called ernie.

opinions4u

lvader wrote: »

Name a savings account that lets you withdraw your monthly interest without penalty and gives 3% per annum year in year out without having to move?

Lots of fixed term accounts paying 4% + over 3 years or longer that pay monthly interest without penalty.

Or easy access accounts paying 2.75% where you can make a penalty free withdrawal each month equal to the amount of interest earned.

lvader

opinions4u wrote: »

Lots of fixed term accounts paying 4% + over 3 years or longer that pay monthly interest without penalty.

Or easy access accounts paying 2.75% where you can make a penalty free withdrawal each month equal to the amount of interest earned.

2.75 gross is very close to the average interest earned on PB's for high rate tax payers.

lvader

dougz wrote: »

With PBs you cannot withdraw any interest, you only get a measly 1.5%, and to add further insult you are then forced to gamble it on a silly slot machine called ernie.

People argue that it would be better to put the money into a regular savings account and gamble the interest. With PB's the interest is automatically gambled each month, you don't need to take it out.

dougz_2

lvader wrote: »

People argue that it would be better to put the money into a regular savings account and gamble the interest.

Yes, but even better to put it in the savings account and not gamble the interest.

karatedragon

I have done alright on my £10,000 in premium bonds. I have got more than 1.5% back anyway and more than the top rate savings.

lvader

dougz wrote: »

Yes, but even better to put it in the savings account and not gamble the interest.

Better is a matter of opinion, you will probably get a tiny bit extra and most likely will need to keep moving the money each year. PB's are more fun, you might end up with more and you are helping the country.

opinions4u

lvader wrote: »

PB's are more fun

You need to get out more .

you are helping the country

I pay tax to do that.

2.75 gross is very close to the average interest earned on PB's for high rate tax payers.

Merely answering the question you posed. Most people don't pay higher rate tax though.

Premium Bonds are poor value for most people.

sabretoothtigger

poppy10 wrote: »

So if I invest in a saving account rather than in premium bonds, will inflation magically become lower for me? :think:

RPI is 4.4% whether you invest in premium bonds or in a savings account. There is no savings account available paying anywhere near enough to keep with inflation.

Some accounts can pay 5% interest, some people are collecting higher rates from now closed deals.

Paying off more from a mortgage might also pay better then premium bonds

I have done alright on my £10,000 in premium bonds. I have got more than 1.5% back

Anyone who collects more then 1.5% should be grateful for the good luck and move on to a better deal. Good luck at the start will be equalled out eventually




RPI was only 4.4% this month. It wont be 4.4 every month hopefully, Im not sure what the 2010 average will be but I think 2009 was abnormally low and it wont be repeated

lvader

opinions4u wrote: »

You need to get out more .

I pay tax to do that.

Merely answering the question you posed. Most people don't pay higher rate tax though.

Premium Bonds are poor value for most people.

If everyone pulled their money out of PB's you you need to pay more tax, you should be saying it's a great product.