Maturing NS&I Guaranteed Growth Bonds interest confusion

sparkiemalarkie

In my maturity options for my Maturing NS&I growth bonds they mention 2 different interest rates - what does this mean when looking to renew
Current rate 4.82%
Guaranteed rate 4.69

tia

sx

subjecttocontract

Could it be your GGB is paying 4.69%.......and the current bonds on offer are paying 4.82% ?

NanookOfTheNorth

NS&I will guarantee if you took out another 1 year bond that you'd get 4.69%, but as their current offering is 4.82% you'd get that if you took out the bond while that rate is currently available to everybody. Look at it the other way round, if their rates had dropped by the time you come to renew to something like 4.25% on their current offering, then you'd be guaranteed to get 4.69% instead.

sparkiemalarkie

Hmm, I'm not too keen on the uncertainty - 4.82% is a fairly decent rate for a 1 yr fixed bond atm.
I guess they don't have to wait for a BOE base rate drop before ditching the 4.82%

sx

nottsphil

https://forums.moneysavingexpert.com/discussion/comment/82109142#Comment_82109142

But surely the point is that they can't drop it any lower than 4.69%, which would beat the 4.57% they might offer with just a minimal BoE cut.

Swipe

https://forums.moneysavingexpert.com/discussion/comment/82109142#Comment_82109142

It's unlikely that the BOE will be cutting the base rate within the next month with the latest monthly inflation figure of 2.9%, and no particular reason why NS&I would be suddenly dropping the new rate either, so I'm looking forward to mine renewing at 4.82% in just over a week's time.

Eco_Miser

https://forums.moneysavingexpert.com/discussion/comment/82109142#Comment_82109142

4.69% is the rate that was on offer when they wrote to you, and they guarantee you'll get at least that rate if you rollover your bond, but they've just raised the rate to 4.82% so you'll get that if it's still available on roll-over day, … and since they've just raised the rate, it's very unlikely they'll be dropping it soon. I'm expecting to get it in October.

ColdIron

It's a collar, a guaranteed minimum rate regardless of any rate changes. But as things stand today you would get 4.82%

tinnedspaghetti

Having 2 different rates shown on your maturity letter doesn't help you decide whether to re-invest or move your investment elsewhere and the letter itself is confusing.

Realistically you won't know what rate you will get until the bond renews however,

"You'll be able to cancel your new Bond within 30 days of the date you receive your investment record. We'll then refund the full value of your Bond with any interest due. This will be the only opportunity to cancel - after the cancellation period you can't withdraw money until the end of the investment term."

So if the rate you get was not what you were hoping for, you have the opportunity to move your investment elsewhere after the bond renews.

What the definitions mean,

• Current rate - This is the rate you are likely to get when your bond renews (however not guaranteed)
• Guaranteed rate - If the rate goes down, you won't get a rate any lower than this value
• If the rate goes up - Great! However you won't know what this will be until your investment renews.
  

Swipe

https://forums.moneysavingexpert.com/discussion/comment/82118931#Comment_82118931

How is it confusing? Just check what the current rate is on your maturity date and then you'll know. If you don't get the desired rate, then cancel within 30 days if you can find something better.

subjecttocontract

......and just to put your mind at rest, I took out a 1 year GGB, a couple of days later they relaunched the GGB at a better interest rate. I took advantage of the 30 day cancellation, I got my money returned within a few hours. I was able to take a new GGB at the latest rate. I was impressed by how quick & straightforward the process was.