MSE News: National Counties BS revives inflation-beating savings

Former_MSE_Guy

This is the discussion thread for the following MSE News Story:

"The building society today launched a tax-free savings account which guarantees to beat the rise in the cost of living ..."

Read the full story:
National Counties BS revives inflation-beating savings

Jonbvn

This is excellent news. I'm shocked that there are not lots of posts welcoming this account.

BTW, get in quick. This is likely to be popular.

Biggles

Jonbvn wrote: »

This is excellent news. I'm shocked that there are not lots of posts welcoming this account.

BTW, get in quick. This is likely to be popular.

The rate's not bad but being locked in for five years is a big disadvantage compared to ILSCs. Plus, of course, most keen savers will already have a cash ISA for this year. It's not for me.

pKaTz

Am i right in thinking that with this the inflation level is checked only 2 times.
Once on 1st October this year. And then at the end of 5 years.
So if during the 5 years it went up, but settled down and was around the same level as now you not be any better off?

Sceptic001

pKaTz wrote: »

Am i right in thinking that with this the inflation level is checked only 2 times.
Once on 1st October this year. And then at the end of 5 years.
So if during the 5 years it went up, but settled down and was around the same level as now you not be any better off?

Yes, although the 1% is guaranteed even if RPI falls over the 5 years. I am pessimistic about inflation over the next two years but 5 years is a long time to lock in.

pKaTz

At least with the NS ILC RPI was every year.

Jonbvn

pKaTz wrote: »

Am i right in thinking that with this the inflation level is checked only 2 times.
Once on 1st October this year. And then at the end of 5 years.
So if during the 5 years it went up, but settled down and was around the same level as now you not be any better off?

A common misconception. You are not comparing the headline rate of inflation (as a %) now and in 5 years. You must compare the RP index now and in 5 years. Provided inflation is positive (i.e. we don't get deflation) you will always get a return. Plus you have to add in the 1% bonus.

lisyloo

This isn't attractive to me because of the tie-in.
I don't think it will be that popular, but hey-ho, time will tell if I'm right or not.
I'd rather take my chance on other rates, thanks.

Reaper

I think this is actually different to the NS&I deal isn't it?

Let's imagine we have 2 years of inflation and 3 years of deflation which cancel each other out.

If I remember right the (somebody correct me if I am wrong) the NS&I one worked it out annually so those 2 years got their growth + 1% and the deflationary years got 1%.

With this one you would end up with just the 1% if I have understood it correctly. So the 2 years of growth would not benefit you in this case.

smallfry27

Yes NS&I added on annually, so you also got the benefit of compound interest.

poppy10_2

Yep, the lack of annual calculation and payment of the "interest" makes this deal much poorer than the NS&I index linked certificates.