Are NS&I Income Bonds better than the "highest interest" easy access savings accounts?

bp5678

I'm considering NS&I Income Bonds. Just wondering if you think it's better than the "highest interest" easy access savings accounts at the moment? I put that in quotation marks as I realise interest rates are awful currently.

colsten

Despite the name, the NS&I Income Bonds account is an easy access savings account, and it currently pays the best interest rate of all easy access accounts.

It comes with a few caveats:

• deposits and withdrawals must be for a minimum of £500
• the monthly interest must be paid into a different account (e.g. NS&I Direct Saver, or your linked account) and therefore doesn't compound 

MinuteNoodles

If you are happy with only depositing and withdrawing a minimum of £500 at a time then yes. However given the trivial amount you'd lose in interest with even a £100,000 balance with the difference between the Income Bonds and Direct Saver I'd go for the Direct Saver instead - you'll literally only be £2 per £1000 worse off but gain a whole load more flexibility. In fact only being able to deposit and withdraw £500 at a time means you're likely to earn less interest as you'll be putting off when you deposit as you'd need to build up at least £500 and you'd have to withdraw more than you actually need to in many cases.

The Income Bonds account really only benefits those who can chuck large amounts in and leave it there.

RG2015

Why not open both? And at the risk of being pernickety, you would be £1.50 worse off per £1,000 with the Direct Saver.

You also need to be aware that the Direct Saver only pays interest once a year on 1st April.

Neil_Jones

RG2015 said:

You also need to be aware that the Direct Saver only pays interest once a year on 1st April.

And that the Income Bonds do not compound interest.  You get the interest paid monthly to you in your bank account, not added to the bond itself, though there's nothing to stop you manually feeding that into the Direct Saver (or any other account of your choosing).

colsten

Neil_Jones said:

RG2015 said:

You also need to be aware that the Direct Saver only pays interest once a year on 1st April.

And that the Income Bonds do not compound interest.  You get the interest paid monthly to you in your bank account, not added to the bond itself, though there's nothing to stop you manually feeding that into the Direct Saver (or any other account of your choosing).

The interest from the Income Bonds will automatically be paid to your nominated account, which can be any UK current account in your name, or your NS&I Direct Saver. You cannot move the interest manually. If you choose the NS&I Direct Saver, any withdrawal from the Income Bonds also needs to go via the Direct Saver, or you need to change the nominated account before withdrawal.

tigerspill

Does the direct saver offer "Fast Payments" in and out?
How quickly can you move funds between the Income Bond account and the Direct Saver account?
I have an IB account but am looking for a more "standard" easy access account and am wondering if this is an option.

easterbunni

tigerspill said:

Does the direct saver offer "Fast Payments" in and out?
How quickly can you move funds between the Income Bond account and the Direct Saver account?
I have an IB account but am looking for a more "standard" easy access account and am wondering if this is an option.

It's immediate

Transferring in/out of the DS to external bank account happens the next day in my experience

colsten

For withdrawal timescales, see https://www.nsandi.com/how-long-does-it-take-receive-withdrawal-payment

coachman12

RG2015 said:

Why not open both? And at the risk of being pernickety, you would be £1.50 worse off per £1,000 with the Direct Saver.

You also need to be aware that the Direct Saver only pays interest once a year on 1st April.

I agree. I have been using NS&I for years ( different account types), largely due to its full protection rather than the normal £85,000 protection limit.

veryintrigued

Another thing to note on the bond type of accounts is that funds transferred in take an age to become cleared such that they show as pending for over a week.

I have two from the 26/27th of July that, whilst still earning interest, are unable to be withdrawn against.

Hence if that causes you difficulty then avoid this type.