New Santander Upfront Bond - is it worth it?

Looter

Santander are offering a 2 year Upfront Bond, you have to invest £8k and instead of receiving interest at the end of the period they send you a new 16gb iPad with Wi-Fi within 8 weeks of opening the account. It's only available to 123 current account customers or 123 credit card customers.

Is it worth it? At the end of 2 years you have a two year old iPad and you get your £8k back which will feel the effects of inflation in that time. My gut feeling is that it's not worth it but on the other hand a new iPad is tempting! Any ideas?

rpc

It's a poor return (3.3% over 2 years), although you do get the interest upfront.

They are trying to make money by attracting people with a glizty offer of a new iPad.

Trust your gut.

grey_gym_sock

looks like that ipad can be bought for £329, so if you instead bought it and put the remaining £7671 (of your £8000) in a 2-year fixed-rate bond, you'd need c. 2.1% net interest to get £8000 back in 2 years. you can get about 3.75% gross for a 2-year fix, so that's roughly the same if your tax rate is 45%. if your tax rate is lower, you're better off buying the ipad yourself.

innovate

They claim it's 3.83% AER. Not entirely sure how they arrive at that because a 16GB WiFi + Cellular is £499. Anyone clever enough to double-check the suggested AER?

Also, some iPad-buffs might be along before long - - - not sure the cellular technology in the iPad 4 is much use in the UK. I believe it needs 4G, which is only just becoming available in the UK on a very limited scale, and I am not sure they will actually work on cellular in the UK?



http://www.santander.co.uk/csgs/Satellite?appID=abbey.internet.Abbeycom&c=Page&cid=1237888970272&empr=Abbeycom&leng=en_GB&pagename=Abbeycom%2FPage%2FWC_ACOM_TemplateW2

innovate

grey_gym_sock wrote: »

looks like that ipad can be bought for £329,

where do you get an iPad4 with WiFi + cellular for £329?

grey_gym_sock

sorry, that was an ipad2 ... is ipad4 another name for "new ipad"? ... (can you tell i'm not interested in ipads? )

innovate

may be it's an iPad3 they offer.....think I got mixed up with the 4G.....still, the latest model is £499 on the Apple site (16GB, WiFi, mobile-ready)

But who knows? The Santander website is unclear which model it is

rpc

Is there yet another iPad? My % interest above is probably out then.

Looking at the link, they are using a value of £624 for the iPad (7.8%). If you can buy it cheaper, then best to do so. In the Apple store, it is valued at £499 and cheaper if you forgo the mobile data.

ChopperST

Slightly off topic but the "new iPad" (technically the iPad 3) is 4G capable but the UK still doesn't have a 4G network until EE (Orange and T-Mobile's new branding) launch towards the end of the year.

Also if you have a smartphone with a data tariff already there's very little point in shelling out the extra £100 for the cellular + wifi and the monthly data contract. You can simply use your smartphone as a wifi hotspot or with an iPhone bond them over bluetooth. Also the current iPad is approximately 6 months old. The new new iPad or whatever they will call it will probably be in stores around March / April time...

thumshie

ChopperST wrote: »

Slightly off topic but the "new iPad" (technically the iPad 3) is 4G capable but the UK still doesn't have a 4G network until EE (Orange and T-Mobile's new branding) launch towards the end of the year.

As the "new ipad" only runs LTE on 700 and 2100MHz it won't even work with EE 4G/LTE when they convert some of their 1800MHz from 3G to 4G. And it won't work should ofCom auction go ahead as currently planned as that will convert 800MHz and 2.6GHz!!

Edit: Innovate - it will work in the UK but only on 3G networks. I believe Three are rolling out HSPA+/DC-HSDPA so it 'could' work faster than the older model..

innovate

rpc wrote: »

Looking at the link, they are using a value of £624 for the iPad (7.8%). If you can buy it cheaper, then best to do so. In the Apple store, it is valued at £499 and cheaper if you forgo the mobile data.

OK, it all makes sense now - £624 gross is £499 after Basic Rate tax. This is the price on the Apple website.

A Higher Rate tax payer could effectively get the iPad on the Santander offer for as little as £375, and for an Additional Rate payer it would be even less. So for those people, it sounds a splendid deal. EDIT: except Santander specifically state that the interest applied should be declared to the HMRC.

A non-tax payer would pay the full £624 for the iPad - - which would obviously be a rather dumb thing to do! EDIT: People with R85 form will get the 20% deduction back as a cheque.

Ordered via Quidco, everybody could buy it directly from Apple with at least 2% off, plus any cashback people would get on their credit cards - max 5% at the moment. That's some £10 - £35 off the £499.

It is probably fair to assume that if Quidco can wing 2% off, Santander will get at least as much "referral money", if not more. So they cash in on that plus have £8K from each customer to lend out at 6.7% APR upwards. Good deal for them if they can find customers for the offer.