Ditch Newcastle BS 4.4% for NS&I?

MrThingy

I jumped onto the Newcastle 4.4% Premium Bond savings when they appeared as it looked like a decent enough deal.

However, now that the NS&I savings are back, I'm wondering if I should pull out the lot from the Newcastle savings and put it in a new NS&I account?

Pros:
+ NS&I not taxed.
+ Higher interest rate.
+ Only just took the Newcastle one, interest lost not an issue?
+ NS&I allows for removing cash after a year with no penalties. (similar to Newcastle BS, but any time after 1 year, not 180 days notice with Newcastle)

Cons:
- Lose interest on the savings so far with Newcastle. (but these losses will account for little given it's less than a month?)
- I'll need to check, but I think I'm past the cool off period to cancel the Newcastle savings account?
- Is it possible to 'burn bridges' with buildings societies? (aka, Dad's army, you go on "ze leest")

It seems like a no brainer, but I'm aware that (as usual) I'm missing something quite obvious. (so please be gentle)

Baldur

MrThingy wrote: »

Cons:
- Lose interest on the savings so far with Newcastle. (but these losses will account for little given it's less than a month?)

If the terms & conditions are the same as for the ISA version of the account, you will lose 120 days interest, however long you have held the account, if you are out of the cooling-off period - any shortfall being deducted from your capital.

See http://www.newcastle.co.uk/savings/PremierISA

6. Withdrawals can be made subject to 120 days loss of interest. If sufficient interest has not been earned then the penalty will be taken from your capital.

MrThingy

Thanks, on reflection it looks to be a penalty high enough to make it not quite worth the effort.

Ah well. To be able to do these things with hindsight, eh?

MrThingy

Oh, I do however have an ISA from last year (the Barclays 3.3% one) and nowhere really to transfer it to this year.

Whilst I know it's always best to transfer ISAs rather than make withdrawals and deposits, I wonder if I should ignore ISAs for the NS&I anyway, as the NS&I has easily enough capacity for me to add to it without worrying about the 5100 limit and I don't really have much faith in decent ISAs popping up this year anyway.

(it'll just sit gaining meagre interest in the meantime anyway)

Baldur

MrThingy wrote: »

Oh, I do however have an ISA from last year (the Barclays 3.3% one) and nowhere really to transfer it to this year.

Whilst I know it's always best to transfer ISAs rather than make withdrawals and deposits, I wonder if I should ignore ISAs for the NS&I anyway, as the NS&I has easily enough capacity for me to add to it without worrying about the 5100 limit and I don't really have much faith in decent ISAs popping up this year anyway.

(it'll just sit gaining meagre interest in the meantime anyway)

Your choice, if you think that you can predict that the NS&I certificates will earn more interest over the next 5 years than transferring the old Cash ISA to a different one that pays a better rate, then it's an option.

therise

I am a bit baffled by the excitement shown over the new 5 year index linked savings.

MSI says you get RPI plus half%, but I have copied and pasted this off their T&Cs

Calculating index-linking
15. An index-linked value will be calculated as


V x B/A where:

• (a) ‘V’ is the value of the Certificate at the beginning of the index-linked period (this will be the purchase price or the value at an anniversary date);
• (b) ‘A’ is the RPI start level and is the index figure applicable to the calendar month in which the first day of the index-linked period falls (this will be the purchase date or an anniversary of it); and.
• (c) ‘B’ is the RPI end level and is the index figure applicable to the calendar month in which the day after the final day of the index-linked period falls. This will be the maturity date, an anniversary date, or the day after the last completed month for which index-linking is earned.

16. In the event of the calculation in paragraph 15 producing a negative value, no index-linking will be applied.

This to me says it's no where near the figures quoted by MSE.

therise

Sceptic001

The important point here is that RPI stands for Retail Prices Index, not the rate of inflation.

So if the index rises from 100 to 105 you get 5% (plus the fixed element). Simples.

mr_fishbulb

MrThingy wrote: »

Pros:
...
+ Higher interest rate.
...

No one knows what the return on the NS&I Index-Linked product will be.It is calculated on RPI going forward, not what it currently is.

MrThingy

Thanks, I guess with the 4.4% rate I at least know that (or thereabouts) is guaranteed for a year.

I think I'll keep with the Newcastle BS account as it seems like as good a place as any for my savings at the moment.

(and I'll probably move the old ISA to the Halifax/BankOfScotland Direct Reward ISA 3% so it's at least gaining some worthwhile interest)

Knowing my luck a much higher rate ISA will come out within the next few weeks.

Baldur

MrThingy wrote: »

Knowing my luck a much higher rate ISA will come out within the next few weeks.

As the Halifax ISA Saver Reward is easy access, you could always transfer out to any higher rate ISA that may appear (as long as it accepts ISA transfers).

MrThingy

Can one transfer several times in one year?

Does it not count towards the 'opening only one account per year' policy? (i.e., technically it's opening a new ISA account with Halifax?)