Kaupthing Edge and ICESAVE - 36 months fixed rate bonds

KeithEssex_2

free4440273 wrote: »

^thanks both:) think i'm gonna go with them: the fixed rate 36 month bond @ 7.16. will await arrival of confirmation email monday (i hope.

A good choice - I'm moving some money from the Halifax to them shortly

laura122

Milarky wrote: »

The AERs are the thing to compare - and the Icesave is higher of course, even ignoring compounding. But there is one benefit to this - which is that for two of the three years no tax is taken - so interest in earned on the taxable portion. Thusly

Kaupthing: non taxpayer 6.5 gross, basic taxpayer 5.2 net, higher taxpayer 3.9 net
compounded annually

Icesave:
non taxpayer 6.7 gross
basic taxpayer +17.18% after 3 years therefore 5.42% 'net' required to compound = 6.78 'gross' if compounded annually
higher taxpayer +12.89% after 3 years therefore 4.12% 'net' required to compound = 6.87 'gross' if compounded annually

Please please can someone explain this?

Icesave is higher of course

This is wrong - Icesave is 6.5 and Kaupthing is 6.7%.

Ignoring FSA protection and using just interest rates can anyone explain which account is better assuming your tax position stays the same throught out the life of the bond.



The thing that makes this difficult for me is the compounding taking place at different times - I am a lower rate tax payer if that helps

KeithEssex_2

laura122 wrote: »

Please please can someone explain this?

This is wrong - Icesave is 6.5 and Kaupthing is 6.7%.

Ignoring FSA protection and using just interest rates can anyone explain which account is better assuming your tax position stays the same throught out the life of the bond.



The thing that makes this difficult for me is the compounding taking place at different times - I am a lower rate tax payer if that helps

The rates were misquoted by me in the orginal post which is why Milarky post shows it the wrong way round.

The one with the higher AER (i.e. Kaupthing Edge).

free4440273

free4440273 wrote: »

^thanks both:) think i'm gonna go with them: the fixed rate 36 month bond @ 7.16. will await arrival of confirmation email monday (i hope.

anybody know what the net interest is on this bond: info was not available on the KE site.

Baldur

free4440273 wrote: »

anybody know what the net interest is on this bond: info was not available on the KE site.

From the KE website "Gross is the annualised rate before deduction of tax at basic rate (currently 20%)" - so net at the current rate of tax is approximately 5.68%.

free4440273

^thanks kindly Sir:)

free4440273

Baldur wrote: »

From the KE website "Gross is the annualised rate before deduction of tax at basic rate (currently 20%)" - so net at the current rate of tax is approximately 5.68%.

spoke to a chap on the phone at KE and he said net interest would be 5.73. Hope I've understood that correct: maybe someone else can confirm?

Baldur

free4440273 wrote: »

spoke to a chap on the phone at KE and he said net interest would be 5.73. Hope I've understood that correct: maybe someone else can confirm?

I did say approximately - mental arithmetic was never my strongest point.

A quick Excel check comes up with 5.728% - close enough to 5.73 not to call him a liar.

free4440273

^yeah, it wasn't a criticism Bal: I was basically trying to confirm (officially, from the horses mouth, so to speak) what you had already said. You've been thanked twice also;)