Buying an NS&I Guaranteed Income Bond

philip42h

I'm looking for thoughts on the best way to buy an NS&I Guaranteed Income Bond ...

My wife has come into some money and would like to buy an NS&I Guaranteed Income Bond to the value of £120k. She wants, not unreasonably, a single account, single bond to that value.

NS&I won't entertain a single transaction for over £99,999.

Our Bank limits us to an overall maximum of £100k in transactions per day and to a maximum of £25k per transaction. I understand that is fairly normal but we didn't realise initially since we don't habitually undertake transaction of this size! 

Santander allows us to make the first payment of £25k by debit card, but blocks any subsequent transaction. Annoying but not totally surprising.

We had a go, got it all wrong, and are now waiting for the funds to come back - quite annoying but no damage done. We now know some ways that don't work.

Does anyone have suggestions as to how best to get the job done?

PloughmansLunch

The quickest and easiest way is to open an NS&I Direct Saver and fund it with the amount you'd like in a bond +£1. This can be over several bank transfers/days. When you have enough in there then you can apply for one of the Guaranteed Bonds and transfer all the funds minus the minimum £1 from the Direct Saver at the end of the application. It will say payment is by debit card only, but if you select the Direct Saver and click continue it will fund it fully.

If you don't like online transactions then there's a specific form to print out and fill in and do it that way, but goodness knows how long that would take.

philip42h

PloughmansLunch said:

The quickest and easiest way is to open an NS&I Direct Saver and fund it with the amount you'd like in a bond +£1. This can be over several bank transfers/days. When you have enough in there then you can apply for one of the Guaranteed Bonds and transfer all the funds minus the minimum £1 from the Direct Saver at the end of the application. It will say payment is by debit card only, but if you select the Direct Saver and click continue it will fund it fully.

If you don't like online transactions then there's a specific form to print out and fill in and do it that way, but goodness knows how long that would take.

I do like online transactions and that was the answer I was hoping for! 
Specifically the part where you say "It will say payment is by debit card only, but if you select the Direct Saver and click continue it will fund it fully" ... 'cos the online help at NS&I really isn't very comprehensive!

Swipe

philip42h said:

PloughmansLunch said:

The quickest and easiest way is to open an NS&I Direct Saver and fund it with the amount you'd like in a bond +£1. This can be over several bank transfers/days. When you have enough in there then you can apply for one of the Guaranteed Bonds and transfer all the funds minus the minimum £1 from the Direct Saver at the end of the application. It will say payment is by debit card only, but if you select the Direct Saver and click continue it will fund it fully.

If you don't like online transactions then there's a specific form to print out and fill in and do it that way, but goodness knows how long that would take.

I do like online transactions and that was the answer I was hoping for! 
Specifically the part where you say "It will say payment is by debit card only, but if you select the Direct Saver and click continue it will fund it fully" ... 'cos the online help at NS&I really isn't very comprehensive!

For your reassurance, I can confirm this works. I opened one using this exact method and funded it from my direct saver.

auser99

Just to check, have you used up your combined £40k ISA allowance this year?

And that you're comfortable having a rate with NSI way lower than a huge amount of other providers offer? Just to keep it all together in one "safe" place?

I only ask as I'm in the process pretty much of moving stuff out of NSI as they're so wildly uncompetitive.

philip42h

auser99 said:

Just to check, have you used up your combined £40k ISA allowance this year?

And that you're comfortable having a rate with NSI way lower than a huge amount of other providers offer? Just to keep it all together in one "safe" place?

I only ask as I'm in the process pretty much of moving stuff out of NSI as they're so wildly uncompetitive.

So, yes to the first ... though my wife's income is low enough that she'll be struggling to pay tax anyway.

To explain ... when I retired my wife decided that she didn't fancy working anymore. She has a small pension pot that she has been taking via income drawdown and growth in that space hasn't been great. So, the plan is to give that a breather and let it recover, and use the windfall to provide an income over the next three or four years until her state pension kicks in.

Ultimately, she wants to do something useful with the cash to help our children - i.e. she intends to give it away. The current NS&I one year fixed guaranteed income bond pays 5%. Beyond that there is the potential of one, two or three year bonds at the same or better rates. And that seems to work to bridge the gap to state pension age.

So that's why we are looking at the NS&I income bonds. If there are better options that fit the bill I'd be very happy to learn (since, 'cos we messed-up, the money hasn't been stashed anywhere yet! )

auser99

philip42h said:

auser99 said:

Just to check, have you used up your combined £40k ISA allowance this year?

And that you're comfortable having a rate with NSI way lower than a huge amount of other providers offer? Just to keep it all together in one "safe" place?

I only ask as I'm in the process pretty much of moving stuff out of NSI as they're so wildly uncompetitive.

So, yes to the first ... though my wife's income is low enough that she'll be struggling to pay tax anyway.

To explain ... when I retired my wife decided that she didn't fancy working anymore. She has a small pension pot that she has been takiome drawdown and growth in that space hasn't been great. So, the plan is to give that a breather and let it recover, and use the windfall to provide an income over the next three or four years until her state pension kicks in.

Ultimately, she wants to do something useful with the cash to help our children - i.e. she intends to give it away. The current NS&I one year fixed guaranteed income bond pays 5%. Beyond that there is the potential of one, two or three year bonds at the same or better rates. And that seems to work to bridge the gap to state pension age.

So that's why we are looking at the NS&I income bonds. If there are better options that fit the bill I'd be very happy to learn (since, 'cos we messed-up, the money hasn't been stashed anywhere yet! )

All fair enough and personal preference always needs to win out.
But there's a multitude of providers offering around 6% interest now.
For example Kent Reliance offer 6.02% for a 2 year bond with yearly interest (or around 5.85% ish for monthly interest)
Have a scroll through the fixed bond table on the site we're on under the banking section.

Always check, but anything Money saving Expert contains in their recommendations table will have the 85k FSCS cover, so being a smaller lesser known name bank shouldn't be a worry.

BooJewels

I would reiterate what @auser99 has said - the NS&I Income Bonds are not competitive at the moment.  I took one a few months ago when they were more so - but that gap has since widened.  I only took one really as the money was already in NS&I, mistakenly thinking that would be easier, which it wasn't in the end. 

My circumstances are similar and I use money put away in fixes to pay monthly interest out to me, as an income.  I too have gone with organisations that weren't known to me a few months ago and carefully checked the FSCS web site etc. to ensure they were covered.  I've been perfectly happy with the choices I've made.  Invariably, as soon as you make a decision, another organisation will up their rates, but that's pretty inevitable - and waiting it out costs money.

They fluctuate a bit in what is offering the best rate and they periodically pull accounts for a short period.  But generally, you could get closer to 6% for monthly paid interest.  If you were to put 60k each into 2 fixes (for FSCS protection), at around that interest, you'd get around £590 / month interest.  You get a little less for monthly interest paid away than what might appear to be the headline AER rate - so do check that they offer monthly interest and can pay it away and what the rate is - it's usually around 0.07 or 0.08% lower - so a headline 6% account would pay 5.92% monthly - ish.

philip42h

auser99 said:

philip42h said:

auser99 said:

Just to check, have you used up your combined £40k ISA allowance this year?

And that you're comfortable having a rate with NSI way lower than a huge amount of other providers offer? Just to keep it all together in one "safe" place?

I only ask as I'm in the process pretty much of moving stuff out of NSI as they're so wildly uncompetitive.

So, yes to the first ... though my wife's income is low enough that she'll be struggling to pay tax anyway.

To explain ... when I retired my wife decided that she didn't fancy working anymore. She has a small pension pot that she has been takiome drawdown and growth in that space hasn't been great. So, the plan is to give that a breather and let it recover, and use the windfall to provide an income over the next three or four years until her state pension kicks in.

Ultimately, she wants to do something useful with the cash to help our children - i.e. she intends to give it away. The current NS&I one year fixed guaranteed income bond pays 5%. Beyond that there is the potential of one, two or three year bonds at the same or better rates. And that seems to work to bridge the gap to state pension age.

So that's why we are looking at the NS&I income bonds. If there are better options that fit the bill I'd be very happy to learn (since, 'cos we messed-up, the money hasn't been stashed anywhere yet! )

All fair enough and personal preference always needs to win out.
But there's a multitude of providers offering around 6% interest now.
For example Kent Reliance offer 6.02% for a 2 year bond with yearly interest (or around 5.85% ish for monthly interest)
Have a scroll through the fixed bond table on the site we're on under the banking section.

Always check, but anything Money saving Expert contains in their recommendations table will have the 85k FSCS cover, so being a smaller lesser known name bank shouldn't be a worry.

Thanks again ...

I'd skipped over Martin's "Top Fixed Term Savings" list on the assumption that one couldn't access funds until the end of the term. Perhaps Martin could add a "Top Fixed Term Savings for Monthly Income"? - but I digress ...

Looking through the list of 1 year fixes today, Smart Save and Cynergy Bank are clear that interest is paid at maturity only. For Atom Bank you can have interest paid monthly but, as far as I can tell from reading the material provided, you can't access said interest before the end of the term. The same appears to apply to the Kent Reliance 2 year bond.

Of the established names, Tesco Bank at 5.85% AER looks promising and is clear that you can have monthly interest paid to a separate account (so monthly income) and then there is, of course, NS&I at 5.12% AER.

I will investigate and discuss with SWMBO ...

BooJewels

I was going to give you a list of the ones I knew that paid monthly interest away, but on looking, many of them either aren't currently competitive, or aren't currently on sale - but that may change at any day.

I have such accounts with Charter Savings Bank, FirstSave, Ford Money (currently 5.89% for monthly paid).  Also check Vanquis, Aldermore, Hodge, Recognise Bank - maybe also Shawbrook.

wmb194

philip42h said:

auser99 said:

philip42h said:

auser99 said:

Just to check, have you used up your combined £40k ISA allowance this year?

And that you're comfortable having a rate with NSI way lower than a huge amount of other providers offer? Just to keep it all together in one "safe" place?

I only ask as I'm in the process pretty much of moving stuff out of NSI as they're so wildly uncompetitive.

So, yes to the first ... though my wife's income is low enough that she'll be struggling to pay tax anyway.

To explain ... when I retired my wife decided that she didn't fancy working anymore. She has a small pension pot that she has been takiome drawdown and growth in that space hasn't been great. So, the plan is to give that a breather and let it recover, and use the windfall to provide an income over the next three or four years until her state pension kicks in.

Ultimately, she wants to do something useful with the cash to help our children - i.e. she intends to give it away. The current NS&I one year fixed guaranteed income bond pays 5%. Beyond that there is the potential of one, two or three year bonds at the same or better rates. And that seems to work to bridge the gap to state pension age.

So that's why we are looking at the NS&I income bonds. If there are better options that fit the bill I'd be very happy to learn (since, 'cos we messed-up, the money hasn't been stashed anywhere yet! )

All fair enough and personal preference always needs to win out.
But there's a multitude of providers offering around 6% interest now.
For example Kent Reliance offer 6.02% for a 2 year bond with yearly interest (or around 5.85% ish for monthly interest)
Have a scroll through the fixed bond table on the site we're on under the banking section.

Always check, but anything Money saving Expert contains in their recommendations table will have the 85k FSCS cover, so being a smaller lesser known name bank shouldn't be a worry.

Thanks again ...

I'd skipped over Martin's "Top Fixed Term Savings" list on the assumption that one couldn't access funds until the end of the term. Perhaps Martin could add a "Top Fixed Term Savings for Monthly Income"? - but I digress ...

Looking through the list of 1 year fixes today, Smart Save and Cynergy Bank are clear that interest is paid at maturity only. For Atom Bank you can have interest paid monthly but, as far as I can tell from reading the material provided, you can't access said interest before the end of the term. The same appears to apply to the Kent Reliance 2 year bond.

Of the established names, Tesco Bank at 5.85% AER looks promising and is clear that you can have monthly interest paid to a separate account (so monthly income) and then there is, of course, NS&I at 5.12% AER.

I will investigate and discuss with SWMBO ...

I have Atom and Kent Reliance fixed rate, no access to the principal savings bonds that pay interest away every month to my nominated current account.

From Atom's FAQs: "You may choose to have interest added to your account (‘paid in’) or paid into your nominated account, which is another bank or building society account in your name (‘paid out’)."

https://www.atombank.co.uk/help/faqs/