Nationwide ISA/NSI Index Linked

Roland_Flagg

He's my situation.

I have about £5,000 in a NS&I inflation linked cert,
which I'm thinking of cashing in when it hits it's first
anniversary next week, as RPI is going down.

I left last tax years Cash ISA allowance till the last minute,
and put the full amount into a Nationwide one paying 3.10%.

I've just opened the new Flex ISA at Nationwide
paying 4.25% with a small amount, and would like to fill this
up, but the money is going to have to come from either my NS&I account,
or last years Nationwide ISA paying the 3.10%.

I can't work out how to move the money around to get the best rate.
Opinions please.

alanq

The NS&I certificate will beat RPI increases for 2 or 4 more years. The Nationwide account offers "A variable rate of 4.25% AER tax-free including an introductory fixed rate bonus of 2.25% until 31 October 2013". So after they have your money you may find that you have a rate much lower than the initial 4.25% long before 31 October 2013.

Update: My mistake. Although variable, there is a promise that the Nationwide rate excluding bonus will not be less than 1.5% + BoE base rate until 01/01/2014. So, unless base rate falls below 0.5%, there can be no early drop in interest rate. For the medium-long term I would still favour the ILSC over the Nationwide ISA.

Zekko

The NS&I IL Cert is also tax free.

opinions4u

I'd leave the money in NS&I.

You do take a risk of the ISA paying more, but at least NS&I gives a promise longer term. The ISA doesn't.

alanq

Zekko wrote: »

The NS&I IL Cert is also tax free.

So is the Nationwide ISA.

kidmugsy

It depends what you want. I value the protection of the purchasing power of my money so I'd hang onto the ILSC. Since 4.25% > 3.1% I'd move my ISA cash.

calypso_rhapsody

Another vote for keeping the NS&I - i think there is a significant risk that over the next few years RPI will increase again - these certificates are the only tax-free way to protect your savings' purchasing power.

alanq

alanq wrote: »

The Nationwide account offers "A variable rate of 4.25% AER tax-free including an introductory fixed rate bonus of 2.25% until 31 October 2013". So after they have your money you may find that you have a rate much lower than the initial 4.25% long before 31 October 2013.

"Nationwide cuts Flexclusive Isa interest rate Building society shaves 0.75% off its loyalty Isa rate, bringing it to 3.5%, just a month after it was launched"
http://www.guardian.co.uk/money/2012/may/10/nationwide-building-soceity-isa-interest-rate

Customers who have already opened an account are unaffected.

The taking care of loyal customers didn't last very long did it?

ffacoffipawb

alanq wrote: »

Well I predicted what would happen but didn't expect it as soon as this.
"Building society shaves 0.75% off its loyalty Isa rate, bringing it to 3.5%, just a month after it was launched"
http://www.guardian.co.uk/money/2012/may/10/nationwide-building-soceity-isa-interest-rate

Nationwide on your side? Although I wasn't caught I'll remember this when it comes to voting on directors pay at the next AGM.

The 3.5% is for new accounts. Those opening the account when the rate was 4.25% still get 4.25%.

Typical rubbish reporting from the lefty rag 'newspaper'.

The first issue of Flexclusive Isa – which is available only to new and existing customers who have a Nationwide FlexAccount current account – was launched at the start of the new tax year in April with a rate of 4.25%. But that has now been withdrawn and a new issue paying 3.5% is now being offered.