Many of you opened a 65+ Guaranteed Growth Bond back in early 2015 – and while the 1 year Bond has long matured, the 3 year Bond is maturing from 15 January. So, what are your options and what do you need to do?
The bonds were on sale for four months from 15 January 2015 until 15 May that year and while more than 470,000 customers invested over £4.7bn in the 1 year Bond, far more invested into the 3 year Bond which was paying 4% AER.
Over 885,000 customers invested more than £8.9 billion in the 3 year Bond so, with the accumulated interest, this means that around £10 billion will be maturing over the coming months.
And it’s important to make sure that you do the right thing on maturity – don’t just let the funds roll over again if there are better options available, or you don’t want to tie the money up for a further three years, which is what will automatically happen if you do nothing.
As we reported last year, due to the volume of investors, maturity instructions will only be accepted online or by post. You can no longer give your instruction over the telephone.
Those that signed up in January 2015 should have by now received their maturity instruction pack, as this will be sent 30 days before your bond reaches maturity.
So, what are the options and how good are they?
NS&I is offering three options in its pack;
Option 1 – reinvest into the newly relaunched 3 Year Guaranteed Growth Bond paying 2.20% gross/AER
Option 2 – reinvest into the 1, 2 or 5-year Guaranteed Growth Bond – see below for the rates currently on offer
Option 3 – cash in your bond and have the money returned to you.
While, you can't add any extra money to your maturing Bond, if you reinvest into the 1 year or 3 year standard Guaranteed Growth Bonds, as these are also on general sale online, you can apply separately to invest more money in them.
The good news is, that for those happy to roll over for another three years, at the time of writing, the NS&I 3 year Guaranteed Growth Bond is very competitive – offering 2.20% compared to the current market leading rate of 2.25% from The Access Bank UK.
The latter, whilst a little-known name, is fully authorised by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and PRA and as part of the Financial Services Compensation Scheme deposits of up to £85,000 per person are fully protected, should the worst happen.
The 1, 2 and 5 year Bonds are less competitive
The NS&I 1 year Guaranteed Growth Bond
This is offering 1.50% compared to the current market leading rate of 1.78% from Post Office Money. On £10,000 this would provide an extra £28 gross.
The NS&I 2 year Guaranteed Growth Bond
This is offering 1.70% compared to the current market leading rate of 2.05% from Paragon Bank. On £10,000 this would provide an extra £35 each year, so over £70 more over the term, allowing for compounding interest.
The NS&I 5 year Guaranteed Growth Bond
This is offering 2.25% compared to the current market leading rate of 2.50% from Paragon Bank. On £10,000 this would provide an extra £25 each year, so over £125 more over the term, allowing for compounding interest.
As well as simply choosing one of the above options, you could decide to split your investment by choosing two or more of them.
The key is to make sure that you get the instructions back to NS&I no later than two days before your bond is due to mature.
But, if the three options above are not suitable, perhaps because you want a regular income, or maybe easy access to your money, there is another option.
If you are interested in any other NS&I product that is currently on sale, you can switch without having to request the funds back first. But of course you should check if the account you are considering is paying a competitive rate of interest, as you could earn more elsewhere.
The NS&I Income Bonds account is an easy access account which pays out the interest each month and is paying just 1% gross/AER compared to the current best buy of 1.32% with AA – although the latter does include a hefty bonus of 1.12% for the first 12 months.
The best simple easy access rate on the open market is 1.30% with the ever competitive RCI Bank. On £10,000 these accounts could mean that you earn up to £32 a year more in gross interest.
For more options check out our Best Buy tables – including easy access, notice accounts or even cash ISAs, to see how the rates and the terms and conditions compare – or call us on 0800 011 9705 for help – we’d love to hear from you.
Staying with NS&I
But if you do decide you want to remain with NS&I, in order to do this, click on the following link which takes you to the Downloads and Forms page on the NS&I website.
Choose the account you’d like to transfer to, for the Direct ISA, Direct Saver, Guaranteed Income Bonds, this will be the ‘Form to switch to …’ option whereas if you want the Premium Bonds and Income Bonds you need to choose the basic ‘Application Form’.
Print and complete the relevant form.
Please note in all cases, it is vitally important to tick the box to state that you want the transfer to occur only after the bond has matured. If you don’t, you will encash the Bond early, which would trigger a penalty.