NS&I Guaranteed Income Bond Monthly Payout

ortolickus

Last month i got a credit to my (Lloyds) bank account, It was just a very long reference number and an amount - neither of which i recognised. After 3 calls to Lloyds all i managed to uncover was another long reference number and the fact that the credit had been issued by a Swedish bank: Handelsbanken. I contacted them and after a very long conversation i was none the wiser. They claimed that they don't handle 3rd-party transactions.
Today, i logged into NS&I and was surprised to see no interest added to the Guaranteed Income Bond that i took out in September. That's when I learned that they did not add the interest to my balance as i had supposed, but paid it "via Barclays" to my bank account. The amount was the same as the amount that i had vainly queried a couple of weeks ago.
So, mystery solved. But i thought i'd post here and maybe save someone the hassle to lay bare this ridiculous pay-out system.

MovingForwards

Were you not aware the interest was paid monthly to you rather than added into the bond?

https://nsandi-corporate.com/news-research/news/nsis-one-year-guaranteed-growth-bonds-and-guaranteed-income-bonds-withdrawn#


3. Guaranteed Income Bonds are a lump sum investment that pays out monthly income at a fixed rate of interest over a set period of time (called ‘investment term’). Interest is calculated daily and paid into the customer’s nominated bank account each month.

ColdIron

Guaranteed Income Bonds pay income monthly. If you didn't want income you should have opened the Guaranteed Growth Bond

BooJewels

The clue is in the name of the product - it's an Income Bond because it gives you a monthly income from your saved principle.  They do standard Income Bonds which are a variable rate and can be cashed in at any time and the Guaranteed Income Bonds which are a fixed/guaranteed rate of interest for a fixed term - one year, in this case.

NS&I do make it pretty clear in the description of the product and their documentation.

refluxer

I had Income Bonds in the past and the monthly payments were received from a payer ending in 'NSIB' and the payment reference was 'IB' followed by my account number so it was fairly clear where the payment was from but, then again, I was expecting the payment (whereas you weren't) which helped !

In case you didn't realise... because the interest is paid away, you'll be getting the gross monthly rate (6.03%) and not the (headline-grabbing) 6.2% AER. It's obviously still a good rate, but just not quite as good as the Guaranteed Growth Bond.

BooJewels

I've just checked mine @refluxer - I have an earlier GIB still running (not at 6.03% unfortunately) - and the reference is as you say, a long string of characters, ending NSGIB, GIB then account number.  

auser99

ortolickus said:

Last month i got a credit to my (Lloyds) bank account, It was just a very long reference number and an amount - neither of which i recognised. After 3 calls to Lloyds all i managed to uncover was another long reference number and the fact that the credit had been issued by a Swedish bank: Handelsbanken. I contacted them and after a very long conversation i was none the wiser. They claimed that they don't handle 3rd-party transactions.
Today, i logged into NS&I and was surprised to see no interest added to the Guaranteed Income Bond that i took out in September. That's when I learned that they did not add the interest to my balance as i had supposed, but paid it "via Barclays" to my bank account. The amount was the same as the amount that i had vainly queried a couple of weeks ago.
So, mystery solved. But i thought i'd post here and maybe save someone the hassle to lay bare this ridiculous pay-out system.

You've had a few slightly narky responses, but what I'm interested in, is what was the reference given?

If it had "GIB" in there, and the actual account number, would have thought you'd put 2&2 together, unless you're awash with 100s of ins and outs.
But if it was like what I get from another bank, the utterly useless "NOT PROVIDED NO REF", then I'm not surprised you were none the wiser.

mikb

ColdIron said:

Guaranteed Income Bonds pay income monthly. If you didn't want income you should have opened the Guaranteed Growth Bond

Remember this is NS&I, they are all thumbs when it comes to things like this. I opened two separate slices of Guaranteed INCOME bonds, the payment out (from my current account) showed a pending card transaction to NS&I GGB.

GGB?

Thankfully, neither I, nor NS&I had actually screwed up and opened the wrong bond. But that incorrect description provided to $MyBank did make me panic and double check.

I cannot understand why the OP's bank would say it was a payment from Handlesbank. Unless the reference number that NS&I use for the bond number just happens to start with the same sort code/IBAN code as a foreign bank, and they assumed that's what it was. After all, those customer reference numbers in that field can be anything the company want it to be... right? E.g. an electricity/gas account number for a Direct Debit etc.

ortolickus

Yes a few narky responses and many seem to have missed the point i was making. I knew i was getting monthly interest; the mistake i made was not realising that it was paid into my bank account rather than added to my savings balance. I missed that during the rather flakey (to my mind) application process.

I suppose this and the fact that i (and my bank) could not decipher the payment reference makes me pretty thick. I confess it did have GIB at the end, but the only thing i could attribute that to was either random letters or Gibraltar! I just would have thought that a reference that included, for example, NS&I would have been less challenging to a simple soul like me.

As i said, I mostly posted my experience to help anyone else who might find themselves similarly bemused. But perhaps others are too smart to be fooled by a perfectly sensible system.

BooJewels

I'm sorry that you felt some of the comments were 'narky' both @auser99 and @ortolickus - I didn't think they were especially - as the GIB is very clearly illustrated by NS&I as to the nature of the product - despite the fact that NS&I are sometimes very odd in their functionality - I don't think this was such a case.   I don't think any of us missed your point either - but your bank weren't exactly helpful either.  The last digits of your reference should have been GIB and the account number.

NS&I ask you to tick that you agree to the Key Facts and Customer Agreement document before you're allowed to open a GIB and the section below is on the very first page of that document - so not really hidden away.  You get chance to download and read this before committing to the account - and every saver opening accounts should do their due diligence in reading this material, so that they're sure of what they can expect from the product and that it meets their needs.  

What is NS&I’s Guaranteed Income Bond

Our Guaranteed Income Bond is an investment that pays interest

monthly at a set rate over a fixed period of time (a term).

The investment’s key features:.

• The Bond is designed to be held for the whole term. You can’t cash

it in before the end of the term.

• Interest is paid into your chosen bank account every month.

• Interest is taxable.

• Once you’ve invested in your Bond, you can manage it online, by

phone or by post.

• You can cancel within 30 days of receiving confirmation of your Bond.

• Bonds are released in ‘Issues’. Each Issue will have a set term and a

set interest rate.

• Each Bond you buy must be for at least £500.

• You can invest up to £1 million per person (or £1 million per trust),

in each Issue of each term (but there is no limit if you reinvest a

Bond when it matures).

• You can invest jointly with one other person.

If you didn't want to receive this interest outside the account, hoping that it would compound, perhaps one way to mitigate what you perhaps perceive as a potential loss, is to open a regular saver and pop the money into that each month, so that you can add a bit more to your interest - I've done that with the interest from fixes that are now somewhat short of current rates.