NS&I to cut premium bond rate and other accounts

enthusiasticsaver

Just moved £50k out of NS and I Income Bonds and opened a Yorkshire building society internet saver.  It  is immediate access so I can move again if needed. That pays 1% but is all accessible I will take the rest out  from NS and I tomorrow and close the account down.  The amount we need access to in the next couple of years will be kept there for emergencies, 2021 holidays and a  replacement car.  The rest is going in our investment portfolio which returned 6.3% this year so we will be reducing our cash holdings and using our allowance for the £2880 SIPPS payment for both of us and stocks and shares ISAS. 

EdGasketTheSecond

Over 10K in PBs and no prizes at all since investing - 8 months; I must be subsidising some new millionaires.

coachman12

Laurence_Harvey said:

Thanks so much for that very detailed summary. I never knew it was so complex.

So, is it a yes, or a no ? 

It's actually not that complex at all.  And you are not alone in asking "is that a yes or a no" -----
 many members are bound to ask the same simple question after an over-complicated and lengthy post, so you have every valid reason to have to ask your question. All the best with the new homes you find for your NS&I savings, Lawrence ( and,BTW, of all your talented performances, I liked your role in "The Manchurian Candidate" more than any other    ).

ScoobyZ

cooldude255220 said:

• Income Bonds down to 0.01%

So if I put £10 million in the income account I will have £1k a year income!
Doesn't really sound like an income account to me.

Laurence_Harvey

coachman12 said:

Laurence_Harvey said:

Thanks so much for that very detailed summary. I never knew it was so complex.

So, is it a yes, or a no ? 

It's actually not that complex at all.  And you are not alone in asking "is that a yes or a no" -----
 many members are bound to ask the same simple question after an over-complicated and lengthy post, so you have every valid reason to have to ask your question. All the best with the new homes you find for your NS&I savings, Lawrence ( and,BTW, of all your talented performances, I liked your role in "The Manchurian Candidate" more than any other    ).

Thanks so much,__very kind of you to say. Did you see me in 'The Alamo'?___one of my better roles that one.

eskbanker

ScoobyZ said:

cooldude255220 said:

• Income Bonds down to 0.01%

So if I put £10 million in the income account I will have £1k a year income!

No, you'd have £9m returned to you and receive £100 income from your maximum £1m balance....

coachman12

Laurence_Harvey said:

coachman12 said:

Laurence_Harvey said:

Thanks so much for that very detailed summary. I never knew it was so complex.

So, is it a yes, or a no ? 

It's actually not that complex at all.  And you are not alone in asking "is that a yes or a no" -----
 many members are bound to ask the same simple question after an over-complicated and lengthy post, so you have every valid reason to have to ask your question. All the best with the new homes you find for your NS&I savings, Lawrence ( and,BTW, of all your talented performances, I liked your role in "The Manchurian Candidate" more than any other    ).

Thanks so much,__very kind of you to say. Did you see me in 'The Alamo'?___one of my better roles that one.

I certainly did, Lawrence----and it's my second favourite out of the many gems. Can I have your autograph please 

bowlhead99

coachman12 said:

Laurence_Harvey said:

Thanks so much for that very detailed summary. I never knew it was so complex.

So, is it a yes, or a no ? 

It's actually not that complex at all.  And you are not alone in asking "is that a yes or a no" -----
 many members are bound to ask the same simple question after an over-complicated and lengthy post, so you have every valid reason to have to ask your question. All the best with the new homes you find for your NS&I savings, Lawrence ( and,BTW, of all your talented performances, I liked your role in "The Manchurian Candidate" more than any other    ).

Although i accidentally forgot to quote the post I was replying to, the response was following up a query from RG2015 who was wondering what rate of return might be realistically obtained and what level of holding would constitute a 'large holding' having seen polymaff's comment that 0.9% was pretty much guaranteed for 'large holders'; there was also some uncertainty on whether that 0.9% rate was with reference to the 'old' or 'new' odds from December draws onwards (there would be more certainty of a large holder getting at least that much with the old odds than there is with the new ones).

As 'how much return might I get' is not really 'a yes or a no' question, it would not expect to get a yes or no answer.

What I did explain was that the rate you would expect to receive in any given year would be lower than the headline prize pool rate, with examples of how you could reasonably have expected 1.2% as a maxed-out £50k holder under the old odds, but practically speaking may well be some lower percentage as a £2k holder because the most likely outcome is that you do not win a prize at all during the first year.  I then explained how the realistic proposition of 1.2% achievable under the old headline of 1.4% prize rate would drop to more like 0.85-0.9% under the new lower rates from the December draw - with small holdings likely less; and why.

I'm not sure if you are suggesting that it's 'not complex' because the maths can easily be worked through if one gets their head around it, or because it's not complex for you because you have no problem committing the max £50k to this product and don't really care that a small holding of £1-2k is likely to yield 0% most years because you don't find yourself in those circumstances.

For some people reading the thread it would be complex because they don't have £50k and so would only be taking a relatively small amount of the allowed commitment (perhaps transferring a few thousand out of their old NS&I accounts whose rates will drop so drastically), and trying to compare what they would realistically be able to get from PBs with what might be achieved on other financial accounts (with a further complication that the returns from those other accounts may or may not be taxable depending on personal circumstances). This gives some complexity to their planning, when they are trying to be a 'money saving expert' but don't have the luxury of a large amount of money to save.

I don't think the sort of question people would have when coming to this thread, of 'what will I probably get from a Premium bond account, so that I can compare with my other options' is a non-complex (yes or no) question, and so my answer wasn't short. There are of course odds calculators online (MSE has one) where people could while away their afternoon experimenting with numbers in a formula engine. But 'over-complicated and lengthy post' is probably needlessly critical, given it went some way to articulate the differences between the prize pool rate and the realistic rate of return for a typical year with a large holding or a small holding and the reasons for those, before and after the rate cut; that sort of reply wouldn't be a one-liner. Perhaps it is an answer to a question nobody was asking, though some readers found it useful.

MiserlyMartin

Prism said:

nbrewitt said:

Sailtheworld said:

It's about time. Not sure why the taxpayer was expected to be providing market leading interest rates to the already wealthy.

Irresponsible comment, not all NS&I savers would class themselves as wealthy by any means 

Maybe not, but there is little reason that the government should be borrowing money from those who have it to spare at a higher rate than they can get from the general market. 

Apart from its due to BOE (read government) policy that rates are near zero and possibly going negative and the government ought to be doing much more to help hard pressed ordinary savers, who are retired or saving for a house. Savers have been screwed for the past 13 years.

Seeing as it is the government's decision to shut down the economy, thus causing all the problems (based on questionable data and made up theoretical graphs about what the death rate COULD do) the very least it could do is support savers during this time.

Some people cannot claim furlough, universal credit or anything and are unemployed living off savings until they go to zero. Some interest would help.

MiserlyMartin

bundoran said:

When I saw that the rate on Income Bonds was being cut from 1.15% to 0.01% I couldn't believe my eyes and thought it must be a typo. 😬

Me too! I got the email this morning. 0.01%  - that really is taking the P. Hey, why not go the whole hog and make it 0.00%,  as this is just an insult