NS&I 1 Year Guaranteed Growth Bonds and Guaranteed Income Bonds at 6.20%

ColdIron

sparkiemalarkie said:

How are you all managing to open this with the 6.20% rate?
When I log into my account it still shows 5%.

https://www.nsandi.com/guaranteed-returns

Middle_of_the_Road

worriednoob said:

I'm in two-minds as to whether it's worth moving my savings from Chip to NS&I or whether I should wait a little longer just incase other banks follow suit and try to beat the NS&I's 6.2%.  Any suggestions?

Presumably your Chip is in the 5% easy access, whereas the NS&I is a fixed term account. Depending on the amount involved, you could split it and open a NS&I bond now and see what happens with other providers in the coming weeks. If you need access to some of the money during the next year though, keep it with Chip

worriednoob

Thanks @friolento and @Middle_of_the_Road

Sorry I should have been more clear with my intentions.  I was actually thinking of leaving some money in Chip for those emergencies and the larger lump sum in NS&I which I won't need for 12 months.  I just can't be asked to move money to NS&I, only to movie it out again within 30 days because another bank has a better interest rate, hence I'm a bit hesitant and thinking to hold out a little longer, but then if you look at like that, each day I wait, I'm losing the additional interest rate that I would get if I moved my money immediately.

boingy

If you anyone is new to fixed bonds it's really, really important to understand that you cannot have the money back during the bond period. After the cooling off period it really is locked away for the year.

worriednoob

boingy said:

If you anyone is new to fixed bonds it's really, really important to understand that you cannot have the money back during the bond period. After the cooling off period it really is locked away for the year.

Thanks boingy - how is having a fixed bond savings account any different to having a fixed savings account with another bank that doesn't allow withdrawals?  I mean is there anything in particular different?  

Just to add - for me personally, I don't need to touch the savings for another year.  I'm leaving enough in instant savers account so that I can access it.

Also can someone please tell me what's the difference between Guaranteed Growth and Guaranteed Income accounts and which is the better option?

ColdIron

worriednoob said:

Also can someone please tell me what's the difference between Guaranteed Growth and Guaranteed Income accounts and which is the better option?

GGBs pay on maturity so gross/AER is 6.20%/6.20%

GIBs pay out monthly and gross/AER is 6.03%/6.20%

If you don't need the monthly income then use the GGBs

If you want monthly income GGBs are useless to you

Same AER

https://www.nsandi.com/guaranteed-returns

Middle_of_the_Road

worriednoob said:

Also can someone please tell me what's the difference between Guaranteed Growth and Guaranteed Income accounts and which is the better option?

With the growth bond, you'll have more money than you put in when the interest is added after a year. GROWTH
With the income bond, you will get back exactly what you deposited initially, having had the interest paid out monthly. INCOME

worriednoob

ColdIron said:

worriednoob said:

Also can someone please tell me what's the difference between Guaranteed Growth and Guaranteed Income accounts and which is the better option?

GGBs pay on maturity so gross/AER is 6.20%/6.20%

GIBs pay out monthly and gross/AER is 6.03%/6.20%

If you don't need the monthly income then use the GGBs

If you want monthly income GGBs are useless to you

Same AER

https://www.nsandi.com/guaranteed-returns

Thanks ColdIron for explaining.

Does going for GIBs mean I'll get less interest overall compared to GGBs?  Or would the interest add up to the same amount as GGB?

Also does receiving the monthly interest mean that I would need to do a tax return as it's classed as income?

EDIT: @Middle_of_the_Road has answered my first question, thank you! 

Albermarle

Thanks boingy - how is having a fixed bond savings account any different to having a fixed savings account with another bank that doesn't allow withdrawals?  I mean is there anything in particular different?

No there is no difference except that savings with NS&I are not subject to the £85K limit for compensation if anything  goes wrong.

I think @boingy was just pointing it out for any new readers who may have not been fully aware of the no withdrawal rules.

Does going for GIBs mean I'll get less interest overall compared to GGBs?  Or would the interest add up to the same amount as GGB?

Yes because you miss out on compounding ( interest on the interest )

Also does receiving the monthly interest mean that I would need to do a tax return as it's classed as income?

No it is still classed as interest, and any tax due would be calculated automatically by HMRC . You only need to fill in a tax return if the interest is over £10,000.

ColdIron

worriednoob said:

ColdIron said:

worriednoob said:

Also can someone please tell me what's the difference between Guaranteed Growth and Guaranteed Income accounts and which is the better option?

GGBs pay on maturity so gross/AER is 6.20%/6.20%

GIBs pay out monthly and gross/AER is 6.03%/6.20%

If you don't need the monthly income then use the GGBs

If you want monthly income GGBs are useless to you

Same AER

https://www.nsandi.com/guaranteed-returns

Does going for GIBs mean I'll get less interest overall compared to GGBs?  Or would the interest add up to the same amount as GGB?

If you took the monthly payments and spent them you would get less interest as they won't be compounded

If you took the monthly payments and put them into another 6.20% account you would get the same but it would be a bit silly and you may not find anyone who will pay you 6.20% on the same terms

Also does receiving the monthly interest mean that I would need to do a tax return as it's classed as income?

That depends entirely on your other income and savings

Taking monthly income would spread it over two years, this could work out well or badly for you depending upon your circumstances

Edit: All interest is classed as income