NS&I Guaranteed Growth Bond

123monty

Hi all thanks for the advice and the information. I have not read my messages as I am busy doing some renovation work. Yes, you all are correct and NS&I has told me that I am unable to cancel the Guaranteed Growth Bond Issue 70 even with any penalties, and reinvest into the new bond. They want to avoid the customer doing this because they would lose out on raising the money. They would not even let me cancel the bond in case I needed the money on an emergency basis. So I am stuck and cannot do anything. NS&I has requested me to write to them but not sure if they can do anything. I am planning to check with the financial conduct authority to see if the financial institute can hold my money.

ColdIron

123monty said:

They want to avoid the customer doing this because they would lose out on raising the money.

When you opened the account you confirmed that you had read and understood the terms of the contract. The contract works both ways. If rates rise the banks profit, if they fall you profit

Contracts bind both parties. If you had the 6.20% GGB how would you feel if rates fell and in 3 months time they reneged on that contract and stopped paying you interest and returned your money?

I am planning to check with the financial conduct authority to see if the financial institute can hold my money.

They won't help, they are a regulatory body. Perhaps you mean the Financial Ombudsman Service? They won't help either as there is no wrongdoing

friolento

Spare yourself the anguish of flogging a dead horse. Fixed term accouns come with T&Cs which say you cannot withdraw early. You agreed to those terms. Nobody, not the FCA and not the FOS and not any Court would agree with your demands.

If you borrow money under a fixed rate deal, would you expect the lender to breach that agreement when rates are on the rise, and charge a higher rate than originally agreed?

IanManc

123monty said:

They want to avoid the customer doing this because they would lose out on raising the money. 

No. They are just keeping to the terms of the contract that both you and they entered into, which is exactly what they should do. If they didn't keep to the terms of the contract you would have a cause for complaint.

You changing your mind and deciding that you no longer like the terms you signed up to doesn't put NS&I in the wrong.

Doctor_Who

I opened a current issue NS&I GGB this afternoon and it was made patently clear during the application process that I had 30 days to cancel if I changed my mind, but after that there was no access to the money until the maturity date. All completely normal for fixed term accounts (I think the 30 days is generous), which normally only allow access in very limited situations (like death).

TheWoodler

It should be noted that fixed-rate fixed-term bonds are not unique to NS&I. *All* providers will set out in their terms and conditions that such products may not be for you if you require access to your money in the interim. *Some* may allow early closure in the event of an actual emergency, such as death of the bond-holder (but that wouldn’t be for you to deal with in that case!) but anticipating an emergency is not an actual emergency, nor is wanting to fix with a bond of another issue at a higher rate. 

If a better product comes along six months down the line, then that’s either the luck of the draw (you’ve fixed at the best available rate at that time) or an opportunity, depending on your savings position. It’s a gamble, in a sense. I don’t complain when it happens to me (I had a 2.7% bond mature with Coventry recently, competitive at the time it was taken out, not so much when it matured, but at least it was earning the best interest it could at the time I took it out.) But it could equally be that long-term some fixed rates could hold up quite well against a falling market. 

You won’t get anywhere with the FCA as that’s how this segment of the savings market works. 

It’s also worth remembering that, with any provider, holding a bond of a previous issue doesn’t preclude you from holding a bond of a further issue with the same provider, subject to the £85k FSCS limit (unlimited with NS&I) and in this case, if you had a spare £500, you could still benefit from a fix at 6.2% - it’s quite a low minimum compared to many.

It sounds like 1-year fixes may not be the right product for you or your circumstances, and you may be better suited to high-rate easy access, notice accounts, or shorter-term bonds (eg 6 months). 

There’s much that could be improved about NS&I but this isn’t a tenable complaint. 

BooJewels

I too took a Guaranteed Income Bond in February paying 3.9% - quite a chunk less than they're currently offering. I also have other fixes maturing soon at 3.15%.

But those were decent rates at the time and I might have only got sub 2.5% for the same cash in an easy access account.  Had I waited it out for better rates, then I'd have lost out on the better interest I got in the intervening period until EA rates overtook them.  There's also some value in knowing exactly what you'll get over a known period of time.

I've currently secured some longer fixes at around 6% - so if interest rates drop next year, I'll be very happy with the arrangement - it'll counter the ones that didn't do as well.  That's the nature of the beast - you secure a higher rate of interest by locking it away.  If those terms don't sit well with you, then maybe fixed savings aren't the right savings vehicle for you.  They suit me well, as the monthly interest is income, but they're not for everyone. 

Dazed_and_C0nfused

NS&I has requested me to write to them but not sure if they can do anything

I think you'll find that was simply a way of ending the discussion, not a serious suggestion that it will change anything.

Bazzalona13295

This is the nature of the beast I'm afraid, but we all go in with our eyes open.

Last December I began 2 x 12 month bonds fixed at 4.35% and 4.4%. I was fully aware the rates could go up so hedged my bets and didn't put huge amounts in, but was content to accept those figures.
 
It would be lovely if we could all ditch them when rates rose elsewhere but it doesn't work like that.

subjecttocontract

I've got 1 year fixed rate ISAs at 3% and another at 3.75% and another at 4.15%. They all seemed great interest rates at the time.......not so good now though.  Most of my fixed rate savings are 6 month fixes which suits me better.