Not sure what to do

alexia88

Hi everybody,

I'd really appreciate some advice, I'm sure this is the right place to look for it.
My mum and dad bought me some NS&I bonds when I was younger and they matured when I was 21, which is nearly 3 years ago but I've only just got around to getting all of the certificates ready to redeem my money because it's been sitting in there and not accruing interest.
Over the 6 certificates, there is just over £800.
I'm looking to place this money in to a high interest savings account that I can pay more money in to by standing order each month.
I'm happy to transfer it or have fixed terms with no access.
If I'm honest I'm really really confused about what I can and can't do and all the different ones available.
Any help would be really appreciated, and if there's anything important that I may have missed, please let me know and I'll answer as best as I can.

alastair_h

Personally I would make sure you use all your tax free Cash ISA allowance before the other options (£5,340 for 2011/12 and £5,640 for 2012/13), click HERE for ISA Best Buys. You should be able to get around 3% for these.

If you go for a variable rate you should be able to pay into it by standing order (check the rate doesn't drop off after the initial rush to subscribe to the ISA).

If you go for a fixed rate account - once the account is closed or fully subscribed too they usually do not allow further deposits until maturity - hence not allowing you to do above by standing order.

Another option may be regular saver accounts, however if an account allows of maximum depost of say £3,000 for example over 12 months with a rate of 4% AER your effective rate is only 2% and you would pay tax on this (assuming you are a tax payer). Click here for regular saver accounts / additional information.

Jake'sGran

I have been buying fixed rate bonds as they offer the best interest and it's hard to find any paying a decent rate over a short period e.g. 2 years. In normal circumstances I would do some research and invest in an OEIC but it's difficult in the current investment climate, and, in any case some fund providers require a minimum of £1000.

If you like the idea of a fund you could find one with a good record which accepts £50 month. Have a look at some of the websites where they show the performance up to five years e.g. Digital look, Trustnet and iii. You might get some ideas.

calypso_rhapsody

Not sure what sort of NS&I bonds you had but if they were fixed term bonds you may find that they have rolled over into further fixed terms ....so you may not be able to access them immediately. Give NS&I a call and they will explain. Or log on to the website - fairly easy as i recall - and you may be able to see them there.

If you plan to save a fixed amount each month you may find that you will get a better return on a regular savings account than you will on an ISA even after taking the tax saving into account. Take a look at the best savings page on this site - link at top of page. Am not sure if it is still available but First Direct were paying 8% on theirs - i think the savvy thing is to use a regular saver for the time you can (they usually last 12 months) and then transfer the balance into an ISA and open another regular saver - but you need to check the rates and do your sums depending on what tax rate you pay.

alexia88

Thank you for your responses, it's definitely a lot to think about. My NS&I bonds didn't roll over, they asked if I wanted them to go in to another fixed term account but I said no, and now they've just been sitting there doing nothing because that's precisely what I've done - nothing.
Hopefully I'll be able to come back and say what I've decided to do.