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Interest rates up 0.9% but premium bonds don't move

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Gan020
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Interest rates up 0.9% but premium bonds don't move

#498868

Postby Gan020 » May 6th, 2022, 12:18 pm

I like my premium bonds but I'm struggling to justify holding them any longer.

Funny how the Treasury select committe always insist banks and building societies should move their rates in parallel with the base rate yet NSandI have done nothing.

As a 20% tax payer I can take my money out of NSandI and give it to Chase. I'll be paying tax but I'll still be better off.

I'll give NSandI a few days to raise their rates.

Gan020
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Re: Interest rates up 0.9% but premium bonds don't move

#500216

Postby Gan020 » May 13th, 2022, 10:23 am

We are now a week on since the BOE raised interest rates and NSandI haven't raised rates on any of their accounts as far as I can see.

Interest rates have risen around 1% on 2 and 3 year on bank/building society bonds since the start of the year whilst NSandI haven't moved at all.

I am going to start moving into 2 year bonds and reduce my instant access holdings with premium bonds

DrFfybes
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Re: Interest rates up 0.9% but premium bonds don't move

#500256

Postby DrFfybes » May 13th, 2022, 1:09 pm

Considering we have had 4 BOE rises since Dec then they are being a bit tardy.

BOE rates dropped to 0.1% in March 2020, yet NS&I didn't drop their rate until December, similarly the Aug 2016 drop in interest rates wasn't reflected until May 2017, although the Nov 17 BOE rise was reflected the following month by NS&I and the July 2018 one was ignored.

Looks like they tend to lag a month or several behind, but I expect they will rise quite soon.

Probably the day after you sell your holdings :)

Paul

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Re: Interest rates up 0.9% but premium bonds don't move

#500261

Postby scrumpyjack » May 13th, 2022, 1:29 pm

The PB notional interest rate is 1% which is not uncompetitive with the instant access savings market. I can't see why they would raise it yet.

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Re: Interest rates up 0.9% but premium bonds don't move

#500479

Postby Maroochydore » May 14th, 2022, 5:12 pm

Gan020 wrote:I am going to start moving into 2 year bonds and reduce my instant access holdings with premium bonds

Whilst I agree with your sentiment it's quite clear that there are more interest rate rises on the way.

I'm looking at Kent Reliance 1 year fixed bond at 2.05%. Their 2 year bond is 2.35%. Not sure I'm going to tie in for an extra 0.3% when rates are rising.

Aldermore, with whom I'm my 1 year bond (1%) matures until early next month, have just increased their 1 year fixed bond from 1.85% to 2%. However their 2 year fixed bond is only 2.10%. Definitely not worth tying up with an extra year for 0.1%.

yorkshirelad1
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Re: Interest rates up 0.9% but premium bonds don't move

#500491

Postby yorkshirelad1 » May 14th, 2022, 7:12 pm

It's a sobering thought when we get animated about the difference between 1% and 2% interest, which, in reality is double, so quite nice really, but double of not very much :-)

And compare to inflation (currently https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/previousReleases around 9% RPI and 7% CPI with April figures due this week, 18 May), it is indeed sadly still not very much.

Gan020
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Re: Interest rates up 0.9% but premium bonds don't move

#500687

Postby Gan020 » May 16th, 2022, 8:51 am

Maroochydore wrote:
Gan020 wrote:I am going to start moving into 2 year bonds and reduce my instant access holdings with premium bonds

Whilst I agree with your sentiment it's quite clear that there are more interest rate rises on the way.

I'm looking at Kent Reliance 1 year fixed bond at 2.05%. Their 2 year bond is 2.35%. Not sure I'm going to tie in for an extra 0.3% when rates are rising.

Aldermore, with whom I'm my 1 year bond (1%) matures until early next month, have just increased their 1 year fixed bond from 1.85% to 2%. However their 2 year fixed bond is only 2.10%. Definitely not worth tying up with an extra year for 0.1%.



I took the Ikano 2 year bond at 2.65%. That was enough for me to tip some savings out of instant access into a bond.

It is my guess that the leading instant access rate from Chase isn't going to go up with interest rates. I'm assuming they have anticipated some of the rate rises and come to the market with a great leading rate to entice customers. I'm also assuming NSandI aren't going to raise rates quickly either as their customers are "sticky" and many will continue to hold their investments even with poor rates.

I cannot decide whether I have gone too early into this bond or should wait. I anticipate rates will get better but evey day I don't invest in longer term bonds I'm losing interest. I doubt I have hit the sweet spot but the 2.65% was enough to tickle my interest.

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Re: Interest rates up 0.9% but premium bonds don't move

#502455

Postby Laughton » May 24th, 2022, 12:12 pm

Premium Bond prize rate will jump from 1% to 1.4% in a move that brings it in line with the best comparable savings accounts.

Savers have been dealt a welcome boost today after National Savings & Investments (NS&I) announced a significant hike to the Premium Bond prize rate.

Starting from the next Premium Bond draw on 1 June, the rate will rise from 1% to 1.4% meaning savers will be in line to win many more high-value prizes.

For example, the total number of £100,000 prizes will jump from six to 10, while the £50,000 prize tally is set to rise from 11 to 19.

There will still only be two £1 million jackpots, however.

DrFfybes
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Re: Interest rates up 0.9% but premium bonds don't move

#502464

Postby DrFfybes » May 24th, 2022, 12:36 pm

Laughton wrote:For example, the total number of £100,000 prizes will jump from six to 10, while the £50,000 prize tally is set to rise from 11 to 19.

There will still only be two £1 million jackpots, however.


Good news, although personally I'd rather see no £1m prizes and 20,000 extra prizes of £100.

XFool
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Re: Interest rates up 0.9% but premium bonds don't move

#502465

Postby XFool » May 24th, 2022, 12:46 pm

...Why is all this discussion of Premium Bonds not on the existing Premium Bonds thread?

monabri
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Re: Interest rates up 0.9% but premium bonds don't move

#502481

Postby monabri » May 24th, 2022, 2:01 pm

"From next month each £1 Bond will have a 24,500 to one chance of winning a prize, from 34,500 to one. This takes the bond's "prize rate" – the effective interest rate – from 1pc to 1.4pc, putting it ahead of the best-paying easy-access accounts on the market."

https://www.telegraph.co.uk/personal-ba ... rize-goes/

Paywalled but at least it looks like there's an increase.


"It is nine years since the interest rate was higher."...Nine years!

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Re: Interest rates up 0.9% but premium bonds don't move

#502593

Postby mutantpoodle » May 25th, 2022, 7:09 am

XFool wrote:...Why is all this discussion of Premium Bonds not on the existing Premium Bonds thread?



because that thread is now only used by people to tell others all about their wins..............or to advise how long it has been since a win

XFool
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Re: Interest rates up 0.9% but premium bonds don't move

#502717

Postby XFool » May 25th, 2022, 11:50 am

mutantpoodle wrote:
XFool wrote:...Why is all this discussion of Premium Bonds not on the existing Premium Bonds thread?

because that thread is now only used by people to tell others all about their wins..............or to advise how long it has been since a win

That in itself is a good enough reason to post other (more interesting) Premium Bond related comment on it. Surely?

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Re: Interest rates up 0.9% but premium bonds don't move

#502865

Postby mutantpoodle » May 26th, 2022, 7:23 am

XFool wrote:..

That in itself is a good enough reason to post other (more interesting) Premium Bond related comment on it. Surely?


could be...but which of the currently 71 pages would you visit to read and enjoy the more interesting content..how long would you spend looking?

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Re: Interest rates up 0.9% but premium bonds don't move

#502893

Postby didds » May 26th, 2022, 9:48 am

just go to the "mostr recent ubnread" by clicking oin the blob adjacent to the thread title in the thread list ?

Gan020
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Re: Interest rates up 0.9% but premium bonds don't move

#506025

Postby Gan020 » June 9th, 2022, 10:35 am

I have pressed the button and cashed in 30% of my premium bonds.

The gap between the returns offered by NSandI and fixed terms bonds is enough to overcome my emotional attachment to them

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Re: Interest rates up 0.9% but premium bonds don't move

#517216

Postby Bouleversee » July 25th, 2022, 11:48 pm

NS&I have now increased the rate on several of their products but nothing added to the premium bond interest pool. Why not, when CPI had risen by 9.02% by the end of May and that is what is being added to their index-linked saving certificates in addition to the negligible basic interest. With such inflation, how can they justify not increasing the Prem. Bond interest pool by some degree?

mc2fool
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Re: Interest rates up 0.9% but premium bonds don't move

#517221

Postby mc2fool » July 26th, 2022, 12:25 am

Bouleversee wrote:NS&I have now increased the rate on several of their products but nothing added to the premium bond interest pool. Why not, when CPI had risen by 9.02% by the end of May and that is what is being added to their index-linked saving certificates in addition to the negligible basic interest. With such inflation, how can they justify not increasing the Prem. Bond interest pool by some degree?

That's simple. They don't want any more money.

Remember, the purpose of NS&I is to give a retail channel for the government to borrow from the general public. When they want to borrow more they make their products more attractive, and when they don't want to borrow as much they make them less so.

Not sure which of their products they've increased the rates on recently, but on a flick through none of them are competitive; indeed, premium bonds, at 1.4% tax free are the most competitive of all of their currently available products.

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Re: Interest rates up 0.9% but premium bonds don't move

#517271

Postby Bouleversee » July 26th, 2022, 9:41 am

mc2fool wrote:
Bouleversee wrote:NS&I have now increased the rate on several of their products but nothing added to the premium bond interest pool. Why not, when CPI had risen by 9.02% by the end of May and that is what is being added to their index-linked saving certificates in addition to the negligible basic interest. With such inflation, how can they justify not increasing the Prem. Bond interest pool by some degree?

That's simple. They don't want any more money.

Remember, the purpose of NS&I is to give a retail channel for the government to borrow from the general public. When they want to borrow more they make their products more attractive, and when they don't want to borrow as much they make them less so.

Not sure which of their products they've increased the rates on recently, but on a flick through none of them are competitive; indeed, premium bonds, at 1.4% tax free are the most competitive of all of their currently available products.


Well, they could just stop selling Prem. Bonds if they don't want more of our money, as they did with the index-linked certificates which have now come into their own for the existing holders. I don't see why existing prem. bond holders shouldn't get an uplift to the interest pool in the face of rampant inflation. I hope they are prepared for large numbers cashing in their bonds to pay their energy and food bills etc.

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Re: Interest rates up 0.9% but premium bonds don't move

#517636

Postby Bouleversee » July 27th, 2022, 1:37 pm

I had another annual statement for one of my index-linked certificates this morning, this one still being subject to RPI change rather than CPI and the RPI uplift was 11.65% rather than the CPI uplift of 9.02% on the certificate statement dated a day earlier than this one. What a pity renewals are now subject to CPI; quite a difference! I have never understood what the difference is in terms of coverage between the two indices (I should access the ONS website) but it makes a substantial difference in terms of income. I have no idea if it is possible to access the interest and indexation on these certificates without cashing them in but the way inflation is going I may well need to. Anyone know?


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