NS&I to cut premium bond rate and other accounts

strawb_shortcake

I'm  maxed out on PBs, I'm leaving it in place for two years at which point I may decide to clear the mortgage when the ERC disappears. 
It's a bit annoying about the interest cut but adds a little excitement.
The emergency fund I had considered switching to income bonds will stay with Coventry BS but will look to move to their new account

Apodemus

I'm somewhat surprised by some of the discussion here.  Sure, people with an interest and understanding of savings and investments, such as the good folks on this board, will be appalled.  But I would have thought that the majority of the money held by NS&I belongs to the apathetic majority who will simply never be aware of what the interest rates are.  The bulk of the population are not constantly moving their money around chasing the best rates and I wouldn't expect a national withdrawal of all money from NS&I in favour of slightly better returns elsewhere.  Many people use NS&I because they trust the country more than the banks.  Some people use NS&I because there is very little risk of default and/or no limit to the sum protected.  Most of that money will stay there unless (or until) headline rates actually become negative.

Bravepants

Apodemus said:

I'm somewhat surprised by some of the discussion here.  Sure, people with an interest and understanding of savings and investments, such as the good folks on this board, will be appalled.  But I would have thought that the majority of the money held by NS&I belongs to the apathetic majority who will simply never be aware of what the interest rates are.  The bulk of the population are not constantly moving their money around chasing the best rates and I wouldn't expect a national withdrawal of all money from NS&I in favour of slightly better returns elsewhere.  Many people use NS&I because they trust the country more than the banks.  Some people use NS&I because there is very little risk of default and/or no limit to the sum protected.  Most of that money will stay there unless (or until) headline rates actually become negative.

Yes, and further, I wonder how many people realize that there is an underlying "interest rate" with PBs anyway. I think a lot of people think of the system as a bit like a lottery, one might win, or one might not. My old gran had PBs but she never went on about the interest rate, just the number of times she won, or didn't win. She wasn't one to worry about inflation either, spending a good proportion of her old age living off her savings interest with the obvious result. She lived to 92 and was only just about running out of money.

zagfles

What's all the fuss about? Inflation (CPI) is 0.2% (RPI & CPIH are 0.5%). The margin between NS&I rates and inflation is less now than it's been for ages. In 2017 CPI inflation was between 2-3%, and most NS&I rates were 1% or less.

Average inflation over the last 10 years has been around 2%, average NS&I rates not much over 1%.

So savers have a better deal now than they've had over the last 10 years!

polymaff

Deru said:

Sounds like everyone's pulling out of Income Bonds.   Anyone sticking with their Premium Bonds?  1% chance of winning something still sounds reasonable.  Invest more to further increase odds?  What do you guys think?  

0.9% tax-free still looks good for tax-payers.  Maybe for non-tax-payers, too.

Stubod

..we will be keeping all our PBs, (if you can afford to "max out", I think (?) you stand a better chance of getting at least the 1% average).We have started to remove all our Investment bonds. Will also be keeping our index linked bonds but assume they may stop the option of renewing them?

grumiofoundation

Stubod said:

..we will be keeping all our PBs, (if you can afford to "max out", I think (?) you stand a better chance of getting at least the 1% average).We have started to remove all our Investment bonds. Will also be keeping our index linked bods but assume they may stop the option of renewing them?

More invested will mean closer to average - average will <1% because the infinitesimally small chance of winning 1 million pulls it up. I expect MSE will update the calculations on the premium bonds page. Although ~0.9% could look very tasty in a few months!

Is an index linked bod where the amount of weight you gain depends on inflation? 

quirkydeptless

The money I withdrew on the 21st didn't arrive on the 22nd and still hasn't.

Maybe their systems are a bit stretched with a mass exit!

ffacoffipawb

quirkydeptless said:

The money I withdrew on the 21st didn't arrive on the 22nd and still hasn't.

Maybe their systems are a bit stretched with a mass exit!

Mine have, the first yesterday by FP and the second today via BACS.

All now in Hargreaves Lansdown Active Savings.

A small ISA is leaving for Hargreaves S&S ISA - form is in the post from Hargreaves to complete and return.

King_Drax_I

I note that the phrase 'negative interest rates' was mentioned. As far as I can see, this means that the 'savings' institutions will siphon money out of the accounts of people saving with them. Now, someone above wrote that money will be flowing out of NS&I and in to other accounts beccause of their rate cuts. However, if companies start to charge people to save with them, I can also see money moving out of accounts altogether, and into a box under the bed. Where they won't be able to get their thieving hands on it.