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

BooJewels

The GIB will pay slightly less, as you're not getting the interest compounded as you go along.  If you put £10k in each account, you'd get £620 added to the growth bond and have had £603 paid out in interest over the year from the GIB at just over 50 quid per month.  Which you're free to either spend or pop into a regular saver or easy access account to earn back a bit more interest for you to close the difference.

ETA: Apologies - I was obviously slower typing than everyone else.  Already answered several times.

boingy

worriednoob said:

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?

No practical difference. My comment wasn't particularly aimed at you - I just wanted to emphasise the fixed-ness for the benefit of anyone who is used to being able to get money out of, say, a fixed ISA by paying a penalty. Almost all fixed savings and bonds outside of ISAs lock you in for the full term and we get occasional posts on here from folks who got caught up in the feeding frenzy of a great rate and then found out the downside! It's a particular problem when rates are rising so some folks who jumped into a 1 year fix at the start of the year are now regretting it but can do nothing about it.

So before you tie up any money for 1, 2 or more years, ask yourself how you'll feel if there are better rates to be had in 6 or 9 months. I personally think variable rates will go up only a little more and then plateau for a year or two but there are no guarantees, and fixed rates may already be close to the top.

worriednoob

Albermarle said:

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 said:

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

Thanks so much guys.  This answers all my questions for now, so it's really appreciated.  I don't think I'm ever going to hit £10k interest, so I can rest assured 

I'm going to go ahead with this and I've decided to go for GGB as I don't need the money for a year and it's going to give me the most interest.

Swipe

Also be aware that you need to take action at bond maturity when you will be contacted and asked if you want to renew or withdraw them. Failing to do anything will result in the bond being renewed for another term (possibly at rubbish rates if they've dropped).

worriednoob

Swipe said:

Also be aware that you need to take action at bond maturity when you will be contacted and asked if you want to renew or withdraw them. Failing to do anything will result in the bond being renewed for another term (possibly at rubbish rates if they've dropped).

That's very handy Swipe - so if NS&I emails me on bond maturity, do we get like a grace-period where we can say no?  Do they move it to another  fix or is it moved to an account where the money is accessible?

Also what if they email me and it never reaches because it ends up in the Spam folder? 

qsk

I'm concerned that debit card of 10k would be rejected by my bank. Anyone know how long it takes for fast payment to get into direct saving account? 

Swipe

worriednoob said:

Swipe said:

Also be aware that you need to take action at bond maturity when you will be contacted and asked if you want to renew or withdraw them. Failing to do anything will result in the bond being renewed for another term (possibly at rubbish rates if they've dropped).

That's very handy Swipe - so if NS&I emails me on bond maturity, do we get like a grace-period where we can say no?  Do they move it to another  fix or is it moved to an account where the money is accessible?

Also what if they email me and it never reaches because it ends up in the Spam folder? 

I believe you have 14 days to make a decision but not sure if that is before or after the maturity date. You would withdraw to your nominated account. Set a reminder either way for 14 days in advance. You would see any email sent in your messages in the portal.

Rheumatoid

worriednoob said:

Swipe said:

Also be aware that you need to take action at bond maturity when you will be contacted and asked if you want to renew or withdraw them. Failing to do anything will result in the bond being renewed for another term (possibly at rubbish rates if they've dropped).

That's very handy Swipe - so if NS&I emails me on bond maturity, do we get like a grace-period where we can say no?  Do they move it to another  fix or is it moved to an account where the money is accessible?

Also what if they email me and it never reaches because it ends up in the Spam folder? 

Stick the maturity date in your diary and log on / chase them if necessary.

friolento

qsk said:

I'm concerned that debit card of 10k would be rejected by my bank. Anyone know how long it takes for fast payment to get into direct saving account? 

An Open Banking deposit (Pay By Bank) arrives within 2 hours and the money is withdrawable / transferrable immediately.

worriednoob

Swipe said:

worriednoob said:

Swipe said:

Also be aware that you need to take action at bond maturity when you will be contacted and asked if you want to renew or withdraw them. Failing to do anything will result in the bond being renewed for another term (possibly at rubbish rates if they've dropped).

That's very handy Swipe - so if NS&I emails me on bond maturity, do we get like a grace-period where we can say no?  Do they move it to another  fix or is it moved to an account where the money is accessible?

Also what if they email me and it never reaches because it ends up in the Spam folder? 

I believe you have 14 days to make a decision but not sure if that is before or after the maturity date. You would withdraw to your nominated account. Set a reminder either way for 14 days in advance. You would see any email sent in your messages in the portal.

friolento said:

qsk said:

I'm concerned that debit card of 10k would be rejected by my bank. Anyone know how long it takes for fast payment to get into direct saving account? 

An Open Banking deposit (Pay By Bank) arrives within 2 hours and the money is withdrawable / transferrable immediately.

Brilliant, thanks guys.  I've put a reminder in my google calendar so hopefully I'll be able to deal with it in time.