NS&I Guaranteed Growth Bond Renewal

sausage_time

Guaranteed Growth Bond, Issue 56, 3 year, 2.2% (nice!) renewal next month. 

Options presented are:

• Default: Guaranteed Growth Bond 3-yearGuaranteed rate, 0.40% gross/AER

Other Options:

• 1-year 1.10% gross/AER
• 2-year 1.20% gross/AER
• 5-year 1.65% gross/AER

With the caveat "This interest rate could change between now and your maturity date. We will give you the rate on offer when your investment matures."

Why would I choose the default?

ColdIron

I have the same set of options. I am going to wait until much closer to maturity before selecting my renewal option but 3 years at 0.40% isn't going to happen. If I choose the 1 year there is a 30 day cooling off period in case the rates change

colsten

The 1 year and the 5 year rates look top. For 2 years, it seems you can get better at Al Rayan. https://moneyfacts.co.uk/savings-accounts

I don't understand what the 0.4% is, and which rate(s) the caveat refers to.

sausage_time

Did you notice that the Summary Box (you can only see if you start to select one of the three options) quotes the wrong rates (Correct at 1 April 2020!)?

• 1-year term, Issue 65: only available to customers renewing a maturing Guaranteed Growth Bond or Investment Guaranteed Growth Bond 1.25% gross/AER
• 2-year term, Issue 57: only available to customers renewing a maturing Guaranteed Growth Bond 1.45% gross/AER
• 3-year term, Issue 60: only available to customers renewing a maturing Guaranteed Growth Bond or Investment Guaranteed Growth Bond 1.70% gross/AER
• 5-year term, Issue 53: only available to customers renewing a maturing Guaranteed Growth 2.00% gross/AER

Muppets.

Like you, I'll wait until closer to my cut-off (almost 4 weeks).

ColdIron

Hmm, I'll take a closer look tomorrow. I got the 3 year Issue 60 at 1.70% last April on a maturing IGGB

ColdIron

colsten said:

I don't understand what the 0.4% is, and which rate(s) the caveat refers to.

The 0.40% (default option) is the guaranteed rate for rolling over the issue 56 3 year GGBs. The caveat applies to the other terms, the implication being that they are likely to reduce the rates on those terms before maturity (11/12/20 for me)

whitesmith

Yes, they 'guarantee' that they will reduce the rates just after you re-invest.

funguy

My one offers to renew automatically for 1y at 0.10%. Or i can renew at 2y at 1.20%, 3y at 1.30% and 5y at 1.65%.  Why do i not get an option of 1y at 1.10% as the post above?  Doesnt seem fair? any thoughts?

Thank you

ColdIron

Apart from rolling over your existing term at a guaranteed rate, all the other options are variable (i.e. you probably won't get them as the rates look set to change)

Your guaranteed 0.10% on a 1 year term is a useful insight to those of us on different terms into the rates that will be on offer next month

Edit: Any 2 or 5 year term holders care to share the guaranteed rates you have been offered?

funguy

Is there any advantage of keeping a GGB going for the future incase rates increase as it doesnt seem to be available for new customers just now?

ColdIron

I suppose that depends upon where you see NS&I rates going in 1 (or 3 or 5) years time. You can get just over 1% elsewhere now, so is it worth putting up with 0.10% for a year in the hope that NS&I pay (simplistically) 0.90% over the odds in a future year? Their rates are not usually table topping and it's not as if they are tax free or have much in the way of advantages that cannot be found elsewhere, except possibly the security of exceeding the FSCS protection threshold.

I will almost certainly be withdrawing my cash and finding another home for it but I have until 3pm on 9 December 2020 (2 days before maturity on 11 December 2020) to make my decision

It's probably worth noting that the terms are changing so you won't be able to cash in early and must hold your bond for the full term but now have a cooling off period and the right to cancel

• Your right to cancel
• If your Bond automatically renews or you renew it for a different term, you'll be able to cancel it within 30 days of receiving confirmation of your new Bond. We'll then refund the full value of your new Bond with any interest due