Premium Bonds

[becs]

These accounts are really clever marketing as you only get 5% on the initial payment and the AER tapers every month over the course of the year, for example, a payment after six months would receive 2.5% and the last month bugger all.

I thought it was 5% for the year. I have a monthly standing order going into it. I know it changes into the crappy rate instant access account after a year, so I'll move it to their latest offering when it expires (as I did last time, and the time before....!)

 

[Old Prestonian]

You get 5% on the money thats actually in the account.

That bit is accurate.

I thought it was 5% for the year. I have a monthly standing order going into it. I know it changes into the crappy rate instant access account after a year, so I'll move it to their latest offering when it expires (as I did last time, and the time before....!)

It is but only on the money that is actually in the account. The last payment (assuming each monthly payment is made) only receives 1/12th of 5% thus the average rate is 2.5%. You are using the accounts as they should be but most of the public are blissfully hoodwinked by the marketing.

 

[Le Chuck]

That bit is accurate.


It is but only on the money that is actually in the account. The last payment (assuming each monthly payment is made) only receives 1/12th of 5% thus the average rate is 2.5%. You are using the accounts as they should be but most of the public are blissfully hoodwinked by the marketing.

The average rate isnt 2.5%. Its 5%
The interest is 2.5% of the end balance and this confuses thick people who think they earn money they havent yet deposited

 

[chunkyshanhawk53]

I will need quick access in the next 6m so struggling to find anything other than premium bonds to park up in.

Marcus, if you’re allowed to invest with a competitor

 

[PTR]

just read an article about premium bonds and that they are reducing how much you need to pay.
I need to start saving properly in the new year, what are people’s thoughts on these? With the interest rates so low I’m unsure what to do with some coin.

Don't take my word for it, read this - they're pretty crap

Premium Bonds

I'm no expert, but look into index linked funds or something similar, wrapped in an ISA - if you want long term growth.

 

[JJH]

I have the maximum for all four in the family and usually get about £200 a month .
Not great about 1% interest.
Better out there

 

[Stormo]

Don't take my word for it, read this - they're pretty crap

Premium Bonds

I'm no expert, but look into index linked funds or something similar, wrapped in an ISA - if you want long term growth.

Best to avoid then. I will look into the various index bank accounts.

 

[Wicksy]

Best to avoid then. I will look into the various index bank accounts.

to put a hundred pund in

 

[DisillusionedOldGit]

Me mam has 50k worth - very rare that she doesn't win something each month

We did have 50k each but never won as much as the crap interest we could have given us , even though on average I'd say we had 6 cheques a month .

 

[matt228]

The nationwide 5% deal is a good one, but you need to switch it every year as the offer expires. And they’ve cut the maximum save per month from £500 to £250 so the most you can ferret away is £3000 a year.

Not that I have any money to be saving right now; if I came into some money I’d pay off some debt. I learned a while ago that there’s no point having a rainy day fund if you aren’t already in the black.

 

[Jimmer13]

just read an article about premium bonds and that they are reducing how much you need to pay.
I need to start saving properly in the new year, what are people’s thoughts on these? With the interest rates so low I’m unsure what to do with some coin.

Good investment, don't lose anything to be fair and I tend to win more on those than I earn in interest in similar amounts invested elsewhere. Plus winnings are tax free, best off if can afford it put in a lump sum, then buy bonds each month. Did that the majority of my working life, just another savings account to be honest.

I'm tempted to cash them in and go wild like

Wahoo! might even buy you two pints like!

 

[TexasMackem]

Grandparents bought about a tenners worth when I was born. I've never won a penny!

Every £1 bond has a 26,500/1 chance of winning a prize. So if you reach 220 years old and you still haven't won anything, you've been very unlucky old bean.

 

[jubblies]

to put a hundred pund in

No prisoners taken at that level

 

[matt228]

Good investment, don't lose anything to be fair and I tend to win more on those than I earn in interest in similar amounts invested elsewhere. Plus winnings are tax free, best off if can afford it put in a lump sum, then buy bonds each month. Did that the majority of my working life, just another savings account to be honest.

Nearly all savings are tax free now, unless you’ve got thousands and thousands of pounds’ worth of interest, IIRC.

 

[AndrewP]

Great investment if you want terrible returns.

 

[Old Prestonian]

Nearly all savings are tax free now, unless you’ve got thousands and thousands of pounds’ worth of interest, IIRC.

£1,000 of tax free interest if you are a basic rate or non taxpayer.

 

[matt228]

£1,000 of tax free interest if you are a basic rate or non taxpayer.

Well I think it’s safe to say most ordinary people, at least in the northeast and of my age, have no hope of earning £1,000 in interest in one year!

 

[Old Prestonian]

Well I think it’s safe to say most ordinary people, at least in the northeast and of my age, have no hope of earning £1,000 in interest in one year!

That is certainly true of most people anywhere in the UK given the low level of interest rates.

 

[Le Chuck]

I am sonjinking about is just a nuisance and confuses the tax man so isn't worth it. Hence premium bonds being OK for me.

I know that you were a higher rate payer which is why i mentioned it.
The chances are when someone one here is after savings advice they are a basic rate payer, dont have that much in savings &/or only want to save a few hundred a month. This being the case premium bonds & ISA's are just pointless & that regular savers & playing banks is the better option.

 

[Charmless Man]

I still have a few thousand ‘residual’ after using them as a holding my pen for my house deposit. The thinking being it’s not going to make much anywhere at any time really but I might win big in those few months.

Probably wouldn’t go for them again tbh, they’re not a brilliant investment.