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

Sebo027

For "Ready Cash" I personally I hold two regular savings accounts (drip fed each year) and a Santander 123 account, even though the interest etc recently has been reduced recently. My emergency fund is in premium bonds, about 12k. 

colsten

RG2015 said:

@Gers, Thanks for your reply. Do you have a take on whether a faster payment or a debit card payment has any benefits over the other?

Debit card deposits earn interest from the day you make the deposit. They clear 2, 3, 4, 5, 6 or 7 banking days after the day of deposit, and they don't debit immediately from your current account. So if you have an interest-earning current account, you can get interest on the same money in 2 accounts at the same time. It will obviously only be pennies, even if you make a large deposit.

Bank transfer deposits leave your current account immediately, and stop earning any interest in the current account immediately, but won't appear in your NS&I account immediately. They say "an electronic transfer deposit received by 18:30 on a banking day will normally clear on the next banking day", so you would normally get interest again on the next day. 

For the purist, debit card deposits offer better value for money. For the panicky person, debit card deposits might be more re-assuring as they immediately show as pending deposits. There's a slight advantage with bank transfers for those who didn't really want to deposit the money and want to withdraw it again before the deposit has cleared. But it really is 6 in one, and half a dozen in the other. 

colsten

AndyPK said:

Hi

Regarding the 1.2% bond. Can you add money each month ? 

Which 1.2% bond are you talking about?

AndyPK

Sorry. The NS&I 1.15% bond. 

badger09

RG2015 said:

@Gers, Thanks for your reply. Do you have a take on whether a faster payment or a debit card payment has any benefits over the other?

There is another potential benefit in using the debit card method if you have a particular current account which is currently one of the most discussed

badger09

AndyPK said:

Sorry. The NS&I 1.15% bond. 

You can buy them whenever you want - minimum £500 each time.

Doshwaster

colsten said:

For the purist, debit card deposits offer better value for money. For the panicky person, debit card deposits might be more re-assuring as they immediately show as pending deposits. There's a slight advantage with bank transfers for those who didn't really want to deposit the money and want to withdraw it again before the deposit has cleared. But it really is 6 in one, and half a dozen in the other. 

Thanks - I think I will stick to a debit card deposit. I need to transfer about £12,000 over to NS&I and I think having it stuck in the ether for a few days would drive me insane with paranoia.

It's all a lot of hassle for a measly 1% - but still 100x the interest I'm currently getting. It's just that with "normal" banks you get used to electronic payments being instantaneous.

EdGasketTheSecond

Any bond paying less than the real rate of inflation (not the CPI lie) is giving you a negative return i.e. you are paying for someone to hold your money for you. Instead invest in gold and silver which will at least maintain value rather than lose it.

dont_look_now

EdGasketTheSecond said:

 Instead invest in gold and silver which will at least maintain value rather than lose it.

Off-topic, and in La-La Land. Gold often goes down in inflation-adjusted value, and has (in the worst cases) lost as much as 80% of its value.

coachman12

dont_look_now said:

EdGasketTheSecond said:

 Instead invest in gold and silver which will at least maintain value rather than lose it.

Off-topic, and in La-La Land. Gold often goes down in inflation-adjusted value, and has (in the worst cases) lost as much as 80% of its value.

It may be off topic but it's not La-La Land. EdGasket is wholly correct. And is it really off-topic when someone states that a bond paying less than the inflation level should be compared with some commodity which is dependable and attractive if savers want to make money.