Leeds BS 1 year 3.6% fixed

apt

Those wanting a home for modest savings could consider the Leeds BS fix until 31.8.12 at 3.6%. Penalty free access to up to 25% of your capital. Minimum balance £100, maximum £5,000 (£10,000 joint accounts). http://www.leedsbuildingsociety.co.uk/savings/fixed-rate-bond-1-year-issue-94.html

meatandtwoveg

Great cheers................

Brian_Bullocks

apt wrote: »

Those wanting a home for modest savings could consider the Leeds BS fix until 31.8.12 at 3.6%. Penalty free access to up to 25% of your capital. Minimum balance £100, maximum £5,000 (£10,000 joint accounts). http://www.leedsbuildingsociety.co.uk/savings/fixed-rate-bond-1-year-issue-94.html

Looks like a good rate. Would you go for this or NS&I index linked, say for just over a year? (ISA maxed out)

ScarletBea

I just opened this one today, super service (unlike the incompetents at Natwest... their loss is Leeds BS gain - and mine!)

Sceptic001

Brian_Bullocks wrote: »

Looks like a good rate. Would you go for this or NS&I index linked, say for just over a year? (ISA maxed out)

3.6% gross = 2.88% net for a basic rate taxpayer.

Index-linked certificates pay RPI + 0.25% tax-free after one year, so inflation (currently 5%) must fall below 2.63% by next August to make the fixed rate a better deal. Forecasts suggest inflation will be falling in twelve months, but my view is that it is unlikely to fall that far that fast. I would go for index-linked and review after 12 months.

DragonQ

Sceptic001 wrote: »

3.6% gross = 2.88% net for a basic rate taxpayer.

Index-linked certificates pay RPI + 0.25% tax-free after one year, so inflation (currently 5%) must fall below 2.63% by next August to make the fixed rate a better deal. Forecasts suggest inflation will be falling in twelve months, but my view is that it is unlikely to fall that far that fast. I would go for index-linked and review after 12 months.

Surely the index-linked certificates are based on monthly averages of RPI, not just what it is in a year's time?

Sceptic001

DragonQ wrote: »

Surely the index-linked certificates are based on monthly averages of RPI, not just what it is in a year's time?

No, NS&I revalue the certificates annually, using the opening RPI and closing RPI figures for the period. There is no averaging.

DragonQ

So if the RPI in September 2011 is 5% and in September 2012 it's 3%, and you got a certificate in September 2011, what would you get after a year? 3.25%?

Ark_Welder

To confirm Sceptic001's comment:

We calculate the index-linking by using the RPI figures that apply to your Certificate at the start and end of each year of investment (not the monthly changes in between).

http://www.nsandi.com/savings-index-linked-savings-certificates#06

Sceptic001

DragonQ wrote: »

So if the RPI in September 2011 is 5% and in September 2012 it's 3%, and you got a certificate in September 2011, what would you get after a year? 3.25%?

Yes. It's perfectly logical. The aim is to protect your savings against inflation for the period of the investment. If inflation is 3% at the end of the period, you get 3% plus the 0.25% bonus. The rate of inflation at the time of investment is an historic figure and is irrelevant.

EDIT: Actually, to be absolutely accurate, for the purposes of calculation, NS&I use the RPI figure published the previous month. So if you invest in September they use the RPI figures published in August 2011 and August 2012.

Ark_Welder

DragonQ wrote: »

So if the RPI in September 2011 is 5% and in September 2012 it's 3%, and you got a certificate in September 2011, what would you get after a year? 3.25%?

RPI won't be 5% - the Rate of Inflation is 5%. RPI is a list of numbers and the changes between to items is used to calculate the Rate of Inflation (i.e. the 5% or 3%).

So if September RPI is 250 and September 2012 RPI is 257.5 then the rate of inflation for that period is 3%, i.e. (257.5 - 250) / 250