NS&Igrowth bonds holding reduced

Jimmithecat

Sorry if it’s been posted before about the 1 million holding for both the growth and guaranteed income bond have been reduced to 10k


https://www.nsandi.com/our-products

bowlhead99

Don't think it was posted before, the Times had an article about it this morning.

They only have a certain capacity to take in net new savings based on how much funding the govt/ treasury needs, and there is perhaps a perception that they shouldn't be seen to be helping out millionaires if that restricts capacity for people of more modest means.

It's only those fixed term guaranteed rate deposit accounts you mention that are being restricted at the moment - the 'normal' monthly paying income bonds are still paying a percent on up to a million so a decent temporary home for big chunks of money coming out of house sales or inheritances where you don't want to lock it away for a fixed term. For people wanting to put money away with a one year lockup there are a fair number of commercial banks offering better rates than nsandi, so it's only the convenience /laziness of not needing to split money to the FSCS limit that we're losing.

bundoran

bowlhead99 wrote: »

It's only those 1 year guaranteed rate deposit accounts you mention that are being restricted at the moment

The reduction from £1million to £10000 applies to the one year and three year issues which are currently on sale.

max11

Great! I was going to invest tomorrow...I had already asked for money to be moved from another saving account to my current account...but no worth investing £10k only at 1.95%

colsten

max11 wrote: »

Great! I was going to invest tomorrow...I had already asked for money to be moved from another saving account to my current account...but no worth investing £10k only at 1.95%

Yeah, much better to put £10k into an account that pays a lower interest rate.

Mickygg

colsten wrote: »

Yeah, much better to put £10k into an account that pays a lower interest rate.

Eh? Why lower? You can get a one year fix higher than the Nsandi 3 year fix.

Thrugelmir

An indication perhaps that a rise in BOE base isn't expected soon.

max11

colsten wrote: »

Yeah, much better to put £10k into an account that pays a lower interest rate.

You don't sound very informed on this matter!

Mickygg:
"Eh? Why lower? You can get a one year fix higher than the Nsandi 3 year fix."

Exactly!

Zanderman

max11 wrote: »

Great! I was going to invest tomorrow...I had already asked for money to be moved from another saving account to my current account...but no worth investing £10k only at 1.95%

Why? You were, presumably, planning to invest much more than £10k at 1.95% before.

Why does it suddenly become unattractive? It's just as competitive as before. Just with a (much) lower investment limit.

Zanderman

max11 wrote: »

You don't sound very informed on this matter!

Mickygg:
"Eh? Why lower? You can get a one year fix higher than the Nsandi 3 year fix."

Exactly!

There are very few products that offer much over more than 1.95% on one - three years, and those only over a few decimal places more.

Colsten's post was answering a comment suggesting that now NS&I's limit was 'only' £10k, the 1.95% rate was no longer attractive, which is counter-intuitive.

It is still attractive, especially for someone who (by implication) had a lot more than 10k to deposit. Finding a place (esp for one year as you suggest) for a LOT more than 10k, at significantly better interest than 1.95% might well be difficult.

bowlhead99

Zanderman wrote: »

Why? You were, presumably, planning to invest much more than £10k at 1.95% before.

Why does it suddenly become unattractive? It's just as competitive as before. Just with a (much) lower investment limit.

The convenience of a high investment limit and treasury protection meant that it was relatively attractive compared to other options that involved splitting your money up into little parcels and creating multiple accounts, even if the interest rate wasn't the best. Aside from being a very well known and trusted name, it could hold large amounts of money without worrying about FSCS protection.

However, now the account only holds a relatively small amount of money, the hassle of splitting up your money can't be avoided, and the NSandI account can't be a 'one stop shop' for your term deposit needs. As such, one has to search the market for competing products - which may involve the hassle of using multiple products , getting into bed with some less-well-known banks or building societies, or having 'novel' solutions (such as app-only banking) as you trawl the market for decent rates.

In doing so: once you've accepted the idea that your term deposit money can't be in all in one place, and you have the hassle of multiple products, and/or the fact that you need to use some less-well known names or methods to hold your money to get the decent rates... you may not bother with the NSandI accounts at all because they don't solve your problems and other institutions do pay better rates.

It's like, if I was going to put £50k into a bank current account that offered 4.5% instant access on the entire balance, I'd jump at the chance. But then they announce they'll only pay that rate of interest on the first £500. You could say to me:"Why does it suddenly become unattractive? It's just as competitive as before. Just with a (much) lower investment limit". Mathematically you're right, that £500 would be the earning the same rate of interest it was going to be. But it only takes a hundredth of the money I have available and is not the highest paying rate in town on that amount of money, so I'd be unlikely to even give the account a second glance. It has gone from being attractive to barely worth using, despite not changing the interest rate.