Switch from Premium Bonds to easy access/60/90 day notice savings account or not?

lohr500

At the start of 2021 when interest rates on easy access and 60/90 day saving accounts were next to nothing, we put a chunk of our "easily accessible, emergency fund" money into Premium Bonds. 

But the landscape is changing rapidly and I am not convinced PB are now the best place for these funds. I realise NS&I have announced that the prize pot will be increased from the October draw onwards. However, the MSE PB calculator shows that we "might" see a 2% p.a. return on our £50k.

At the risk of losing out on a massive win, I have decided to cash in our PB after the October month end draw and put the cash into whatever fscs protected savings account is offering the best deal in early November.

Are others thinking the same, or do you think I have made the wrong decision? Interested to hear your thoughts.


 

masonic

I cashed mine in quite a while ago - as soon as easy access savings accounts started paying a better rate than the prize rate for someone with average luck. The recent change to prize rates is not going to tempt me back.

Albermarle

However, the MSE PB calculator shows that we "might" see a 2% p.a. return on our £50k.

If you have the full £50K, then it is highly likely that you will see a return of 2% over a 12 month period.  Might be a little bit more, or less, but should be thereabouts.

Plus a very small chance of winning a big prize + any returns are tax free (which is beneficial for some) 

cricidmuslibale

masonic said:

I cashed mine in quite a while ago - as soon as easy access savings accounts started paying a better rate than the prize rate for someone with average luck. The recent change to prize rates is not going to tempt me back.

I probably would have cashed mine in by the end of this calendar year had NS&I not significantly improved the prize interest rate as they just have done for the recent October draw onwards. Now I’m going to wait and see whether NS&I continue to improve the prize interest rate every few months as interest rates continue to rise or not. If they do improve it regularly then I’ll stick with Premium Bonds, if not, I’ll be off to a suitable home for my money elsewhere pretty quickly!

Wheres_My_Cashback

lohr500 said:

At the start of 2021 when interest rates on easy access and 60/90 day saving accounts were next to nothing, we put a chunk of our "easily accessible, emergency fund" money into Premium Bonds. 

But the landscape is changing rapidly and I am not convinced PB are now the best place for these funds. I realise NS&I have announced that the prize pot will be increased from the October draw onwards. However, the MSE PB calculator shows that we "might" see a 2% p.a. return on our £50k.

At the risk of losing out on a massive win, I have decided to cash in our PB after the October month end draw and put the cash into whatever fscs protected savings account is offering the best deal in early November.

Are others thinking the same, or do you think I have made the wrong decision? Interested to hear your thoughts.


 

Tax status is all important for individuals when considering PBs against AERs. For higher tax rate payers they still provide a very good option which at the new rate will effectively easily beat most notice accounts up to 120 days.

cricidmuslibale

Albermarle said:

However, the MSE PB calculator shows that we "might" see a 2% p.a. return on our £50k.

If you have the full £50K, then it is highly likely that you will see a return of 2% over a 12 month period.  Might be a little bit more, or less, but should be thereabouts.

Plus a very small chance of winning a big prize + any returns are tax free (which is beneficial for some) 

Assuming NS&I make at least one further increase to the prize interest rate during the next 6 months or so - they’d better do or I and many others like me will be off elsewhere - then the average luck return on a full holding over the next 12 months will be noticeably greater than 2%!

oz0707

Wheres_My_Cashback said:

lohr500 said:

At the start of 2021 when interest rates on easy access and 60/90 day saving accounts were next to nothing, we put a chunk of our "easily accessible, emergency fund" money into Premium Bonds. 

But the landscape is changing rapidly and I am not convinced PB are now the best place for these funds. I realise NS&I have announced that the prize pot will be increased from the October draw onwards. However, the MSE PB calculator shows that we "might" see a 2% p.a. return on our £50k.

At the risk of losing out on a massive win, I have decided to cash in our PB after the October month end draw and put the cash into whatever fscs protected savings account is offering the best deal in early November.

Are others thinking the same, or do you think I have made the wrong decision? Interested to hear your thoughts.


 

Tax status is all important for individuals when considering PBs against AERs. For higher tax rate payers they still provide a very good option which at the new rate will effectively easily beat most notice accounts up to 120 days.

This was my immediate thought. I suppose it depends how much other savings you have but I suppose 2% is equivalent to 2.5% for basic rate taxpayer

MX5huggy

I’m happy, you can’t get significantly better rates on a simple savings account with £20k plus. I’m not willing to chase around for 5% for 5k here and 4.5 for 3k there. I use a regular saver but at the end of the year that will likely get dumped in PB’s 

eskbanker

lohr500 said:

I realise NS&I have announced that the prize pot will be increased from the October draw onwards. However, the MSE PB calculator shows that we "might" see a 2% p.a. return on our £50k.

At the risk of losing out on a massive win, I have decided to cash in our PB after the October month end draw and put the cash into whatever fscs protected savings account is offering the best deal in early November.

Just to be clear, the increased PB rate applied from the draw that has just taken place earlier this week ('October draw' means the one at the start of October, not the one on November 1st), so if you're going to pull out for a better rate, then now is as good a time as any, rather than waiting another month....

lohr500

Thanks to all for the feedback so far and to eskbanker for clarification on the timing of the new PB rates. 

As we are part way through the month, I decided to leave the PB in place until after then next draw. Ever the optimist, there will be one last chance for a big prize!! 

I'm watching for any new easy access/short term savings accounts daily and if rates improve before the PB cash is released, I will open an account with some other cash we have available.

Stargunner

I will be keeping my max holding as it is a good tax shelter for me.