MSE News: NS&I revives inflation-beating savings certificates

JamesU

whu wrote: »

I took one out in May 2010 so will have to wait until the May figure comes out for 2011 - thanks.

When you buy ILCs (index linked certificates) the starting RPI is based on the figure from the previous two months. So you need to compare RPI Mar 11 (published already) with RPI Mar 10.

I also purchased ILCs for a relative at the end of May 10, as this was a good month to buy them (guaranteed 1.8% + 11 months RPI inflation, see posts below). First year return on those previous ILCs will be 6.2% (RPI Mar 11/Mar 10 = 232.5/220.7 = 1.0535 = (5.35% + 0.85% bonus) = 6.2% for the 3yr 20th Issue. Obviously, this does not mean you will get the same return in the the next 12 months though. At the end of year 2 that depends on %RPI published in May 2012 which will be based on RPI Mar 12/Mar 11 + bonus (0.95% from memory).

http://forums.moneysavingexpert.com/showpost.php?p=33182303&postcount=61
http://forums.moneysavingexpert.com/showpost.php?p=33006931&postcount=4

JamesU

Consumerist

noh wrote: »

No you need the March figures as stated by chris1 . These were published in April.

Quite right. I make it as follows :-

RPI Mar 2010: 220.7
RPI Mar 2011: 232.5

Interest = 5.35% (indexing) + 0.85% (fixed in yr1) = 6.20% tax free. :j

Consumerist

bertsilver wrote: »

Might be a bit thick, what is a ILC?

Index-linked certificates. Strictly, they are called Index-Linked Savings Certificates (ILSCs). Sorry for any confusion.

Svenena

I applied on Thursday. I'm using £4500 from my Vantage account - I didn't want to risk waiting until the interest rate drop on those accounts in case the ILSCs are withdrawn before then. I'm already going to fill my cash ISA this year, and have a couple of the highest interest regular savers, so it was a great solution for what to do with the Vantage money. I'll reassess in a year, to see what the banks are offering then.

They haven't taken the money yet though, and it's still showing in my available balance. I'm wondering whether it's not going to get taken until I've returned the application form/proved ID, perhaps because I'm a new customer with them? It doesn't matter that much though, as the money is earning good interest in the meantime.

ed123_2

...just a little warning re those applying using their Lloyds account....I had an automated call from them today,,,I rang back and they have declined my debit card payment to NS&I,,,I told them to lift the block and subsequently rang NS&I who said I should have got an e mail saying the application was rejected( and would not try to take the money again using the same application),,,,no e mail,,,,they said I should apply again,,,,now I am worried about double payment been taken

Consumerist

Svenena wrote: »

I'll reassess in a year, to see what the banks are offering then.

It's a good idea not to take inflation for granted for too long. IF, for example, the BoE gets RPI inflation down to, say, 3% over the next year and IF base rate has risen (some are predicting up to 5%) by this time next year then 3.25% net on the ILSCs (4% gross for basic-rate taxpayers) might not look so attractive but the ILSCs will have been earning that rate for the whole of the year. There could be mass cash-ins this time next year but that doesn't mean they were a bad choice for the coming year.

Consumerist

ed123 wrote: »

. . . now I am worried about double payment been taken

I don't think the ILSC offer is likely to disappear overnight. Wait a day or two to see what happens regarding your original application then apply again if necessary.

Sceptic001

Consumerist wrote: »

It's a good idea not to take inflation for granted for too long. IF, for example, the BoE gets RPI inflation down to, say, 3% over the next year and IF base rate has risen (some are predicting up to 5%) by this time next year then 3.25% net on the ILSCs (4% gross for basic-rate taxpayers) might not look so attractive but the ILSCs will have been earning that rate for the whole of the year. There could be mass cash-ins this time next year but that doesn't mean they were a bad choice for the coming year.

It is practically impossible for inflation as measured by the RPI to fall while base rates are rising because mortgage interest rate form a significant part of the RPI.

Consumerist

Sceptic001 wrote: »

It is practically impossible for inflation as measured by the RPI to fall while base rates are rising because mortgage interest rate form a significant part of the RPI.

Good point.

dqnet

So who has taken any of these out?