New Santander Upfront Bond - is it worth it?

NikkyWikky

Taking the above into account the ipad is worth £499 on Apple's website.

The highest paying 2 year fixed is 3.5%. On 8k this is £8,454.27 (basic tax payer) which is £454.27.

So your making £44.73 profit

Ain't this a good deal?

rpc

NikkyWikky wrote: »

Ain't this a good deal?

Perhaps, if you were going to buy an iPad right now anyway.

If you wouldn't have bought an iPad without this offer, then it probably isn't a good deal. You end up with an iPad you wouldn't have bought instead of interest that you would have earned.

You can bet Santander isn't paying £499 for them.

NikkyWikky

You could technically sell the ipad, looked on CEX and they giving £513 but that probably decrease after 8 weeks

Jeddy

I think I can see how this would work for someone...
You would have to be wanting an 16Gb iPad not now, but after 8 weeks (too late for Xmas then).
You would have exactly £8000 pounds to invest for 2 years (invest any more and you are giving Santander free interest).
You would have been buying the iPad at full list of £499 (so not using Quidco etc..)
In those circumstances it makes sense.
Rather a niche market I'd have thought, either that or they don't think much of their customers intellect.
Having read their webpage however I fear there is an amount of confusion marketing going on - talking about 3.83% for 2 years for comparison purposes (not making it clear what they are comparing it with) and a free iPad.

I personally feel that they should make it clearer what is happening - deposit at least £8k with us for 2 years at 0% interest and we'll order an iPad for you with a list price of £499 from apple within 8 weeks.
If people can't work out how that compares with other savings products they are unlikely to be able to work out whether what they are currently offering is a good offer either. Maybe in the small print mention the 3.83% bit.

rpc

Jeddy wrote: »

they don't think much of their customers intellect.

Here is your answer. There are some people it may be genuinely beneficial for, but for most it is an attempt to get people's money by triggering the "oooh shiny" reaction.

Having read their webpage however I fear there is an amount of confusion marketing going on - talking about 3.83% for 2 years for comparison purposes (not making it clear what they are comparing it with) and a free iPad.

They aren't comparing it with anything. That's the AER they are obliged to state.

Jeddy

rpc wrote: »

They aren't comparing it with anything. That's the AER they are obliged to state.

I think that was my point, a comparison has to be with something, you can't just compare apples - you have to compare them to e.g. oranges. They don't make clear on their website what the 3.83% is compared to - just that it is there as a comparison.
"Interest - 3.83% gross/AER (fixed) for comparison purposes only, will be applied upfront on the term start date and the net interest will be used to buy an iPad with 16GB memory, that has Wi-Fi and is Cellular ready No further interest is earned."
Is there any interest? Isn't it more a case of interest forgone and an iPad? Or maybe the interest is 1 iPad? (that's slightly less than 0.5 iPad APR). If they say the APR is there for comparison isn't that a confession that there is no interest - in which case no need to mention it except to confuse?
Yes, I think I'd be happier if it said Interest forgone - 3.83%..
Curious what the FSA / ASA make of that.

rpc

It depends on what you mean by "interest". Most people think of cash paid back into the account (which there is none). That isn't always the case.

Interest can be paid as cash, shares, sheep, bushels of wheat or iPads. But it has to be expressed as an AER.

grey_gym_sock

just like "real" interest, they are deducting 20% tax before buying the ipad, and you have to pay more tax if you're on higher rate. whether you can do that by cutting off 1/4 of the ipad and sending that to hmrc, i'm not sure ...