YBS Guaranteed Investment Account - any catches

Ike1

Hi all-

Just came across a 'Guaranteed investment account' by YBS that is fixed for 4 years and has a 12% interest rate: http://www.ybs.co.uk/investment/guaranteed-investment.jsp

Seems a little too good to be true! Can you find any catches?

Ike

DeepSporran

It doesn't have a 12% interest rate PER ANNUM. If the FTSE growth over 4 years is insufficient, then you are guaranteed 12% instead, but that's a one-off. So it's actually worth less than 3% per year.

Ike1

Ta -

I knew that there must be something wrong with this account!

Almost got suckered in!

Purple_Peril

I agree with DeepSporran

I've just had a look at this, as I thought 12% was a very good rate, and I just came back here to post the same thing. It's 12% over 4 years which is about 2.475% per annum (compound).

wriggly

The 12% is over the 4 years, so the guaranteed rate is actually less than 3% per annum.

These schemes typically do not include dividends in the calculation of FTSE gains.

The way they calculate the gain in the FTSE is rather misleading. If the FTSE doubles (increases by 100%) you don't necessarily get 40% of the gain. It depends on the route it takes to get there. If the FTSE stays still for 2.75 years, then increases significantly every quarter, your maximum return would be 12.5% over 4 years.

With a bit more time, I can probably add more...

dunstonh

Its rubbish. Very rubbish.

If you really have to consider a GEB then I think the Premier one is probably the best one at the moment mainly due to the 16% kick out.

mrsw

Oh dear, I was persuaded to open the latest version of this account for my ISA. 4 year fixed at 11.25% with bonus of up to 40%.

I have just noticed that Credit Suisse is the deposit taker. As this is not a savings account per se, is my money protected by the FSCS scheme?

dunstonh

As this is not a savings account per se, is my money protected by the FSCS scheme?

Yes and no. A number of structured products have failed recently (backed by Lehmanns) and there is not FSCS protection on these as they were not UK based. I havent looked at the ones on this thread. If CS is the UK based arm then you should be fine. If its offshore then it wont be.

mrsw

dunstonh wrote: »

Yes and no. A number of structured products have failed recently (backed by Lehmanns) and there is not FSCS protection on these as they were not UK based. I havent looked at the ones on this thread. If CS is the UK based arm then you should be fine. If its offshore then it wont be.

This is what the YBS website states, but I'm none the wiser. Think I might have to give them a call.

The Guarantee is the obligation of Credit Suisse International to repay the capital invested in the deposit in full at maturity. Should Credit Suisse International default, there is no guarantee provided by any third party. Credit Suisse International is a member of the Financial Services Compensation Scheme, which provides limited protection to deposit holders.