NS&I RPI Tracker

FATBALLZ

I can't quite make sense of the wording on my NS&I RPI+1% certificate that I took out...

I took out the certificate on 11th Feb last year, am I correct in thinking that tomorrows RPI figure will be used to calculate the interest for the entire first year on 11th Feb this year.

So if RPI tomorrow (for December) is 5.1% and my certificate is £1000, I would get £61 interest (including the +1) if I were to cash it in on 12th Feb?

Lansdowne

There is no such thing as a one-year certificate. You have a 3 or 5 year cert and the average over the period is 1% but at the end of year 1 it will be RPI+0.7% or something as advertised when you bought it. The added amount increases each year.

However as for your timing question, yes the RPI for the first year will be the one announced this week.

Loughton_Monkey

I don't think OP implied he has a one year certificate.

But yes, OP, you need to confirm with the exact wording, but my understanding is that you can cash it in, now, with the 'full' RPI interest, plus a percentage which will not be 1%. Depending upon the issue, they only 'average' 1% but it is 'staged' so that it goes up the longer you hold the bond, and it only averages 1% if you hold for the full term. Otherwise, as Lansdowne says, it will be 0.7% or something.

ManAtHome

RPI+0.75% if it's a 5 year, RPI+0.85% for a 3 year (the RPI+ goes up each year to average out at RPI+1% over the full term).

You can check the (approx) value on the NS&I site http://www.nsandi.com/products/ilsc/calculator - may take a few days to pick up December RPI (announced tomorrow I think).

slinga

So many question about this sort of thing here.

Why don't the Gov write the T & Cs more clearly?

xrjtg

There's a problem with understanding of rates of change in general. To take the example of inflation, first we have the index, then the annual growth in the index (which is what tends to be reported in the media), then the rate of increase or otherwise of that growth rate ("inflation to shoot up"). I'm not entirely sure that everybody who writes about these things understands the distinctions.

lisyloo

Once you've held then for a year, does it matter which day of the month you cash them in on?
Basically I'm asking do they pay subsequent interest in months or do they calculate it daily?

Loughton_Monkey

lisyloo wrote: »

Once you've held then for a year, does it matter which day of the month you cash them in on?
Basically I'm asking do they pay subsequent interest in months or do they calculate it daily?

After one year, they can be cashed in any time, but interest is paid on a 'monthly' basis depending upon the published inflation figure (monthly). Hence there is an 'optimum' time each month to choose if you want to cash them in.

FATBALLZ

Thanks for the help, to clarify it is a 3 year certificate, I forgot about the incremented interest, so it will be 4.8% + 0.85% for the year. Cheers!

And I agree the T+C are as clear as mud, read through them several times and I've always been confused about this point.

CosmoKramer

I took out a 3 year cert last Summer...with the current RPI rises, would it make sense to cash in next Summer and invest the money elsewhere or will I see the benefit of currrent RPI rises even if I hold out for the full three years?

PS. calculator on the NS&I website has been updated to reflect 18-Jan rate

wriggly

CosmoKramer wrote: »

I took out a 3 year cert last Summer...with the current RPI rises, would it make sense to cash in next Summer and invest the money elsewhere or will I see the benefit of currrent RPI rises even if I hold out for the full three years?

Yes, on each anniversary, any gains are locked-in, so you cannot lose that year's gain. So the OP will have a 5.65% gain for this year, even if they hold for the full 3 years. Of course, they may not get that rate for the remaining 2 years. After 1 year, you could consider whether RPI + 1% (technically, RPI + the average of the remaining years' rates) is better than what else is available.

Hint: RPI + 1% tax-free and fully guaranteed by the government is hard to beat.