NTMA increases rates for State Savings products
- Thread starter Brendan Burgess
- Start date
Most of their tax-free returns are still lower than the banks after-tax returns.
Maybe NTMA don't want to cause an outflow of cash from banks if NTMA rates were better, while still looking good with their new rates announcements under pressure from Mr McGrath.
Maybe NTMA don't want to cause an outflow of cash from banks if NTMA rates were better, while still looking good with their new rates announcements under pressure from Mr McGrath.
I am not impressed by the presentation of total returns as the 'interest rate', with AER as the secondary consideration. Since when are we comparing products based on total return %? It is misleading for an uninformed consumer IMO.
For some reason, NTMA don't call the return 'interest' on Bonds. Its called 'bonus' in the T&Cs document.
Savings Bonds (Issue 17) - 3 Year Term – Total Return 1%
2.1 A bonus will be payable on Savings Bonds (“Bonus”), in accordance with this condition, on the earlier of:
(a) the Maturity Date, or (b) the date of Early Redemption.
2.2 Where held until the end of the Term, the total amount of the Bonus payable to you will be 1% of the Principal Amount as at the Maturity Date.
Savings Bonds (Issue 17) - 3 Year Term – Total Return 1%
2.1 A bonus will be payable on Savings Bonds (“Bonus”), in accordance with this condition, on the earlier of:
(a) the Maturity Date, or (b) the date of Early Redemption.
2.2 Where held until the end of the Term, the total amount of the Bonus payable to you will be 1% of the Principal Amount as at the Maturity Date.
Duke of Marmalade
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Overdue but welcome. All the same the Prize Bond rate of 1% does not compare well with the UK Premium Bond rate of 4%.
I attach a revised spreadsheet for Prize Bonds.
The €50 prizes are becoming €75 prizes and will amount to an after tax return of 0.79%.
I attach a revised spreadsheet for Prize Bonds.
The €50 prizes are becoming €75 prizes and will amount to an after tax return of 0.79%.
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Duke of Marmalade
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I see no reference to 4 year National Solidarity Bond, currently paying a measly 0.50% and totally out of kilter with new rates. Maybe it is being withdrawn.
It has. Its in the press release under "other information".
podgerodge
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I think it's shabby and questionable from a consumer point of view. For a minute myself, I saw the 4% on the 3 year, and thought they were beating AIB. Until I saw the 1.34% AER. This type of messing has the potential to lock some people in that look at the headline %.
askabouttax
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NTMA previous position on State Savings rates:
"The NTMA constantly reviews rates to ensure that products remain competitive in the savings market generally, whilst providing good value to the Exchequer in terms of borrowing costs."
NTMA position as stated today:
“In setting interest rates on State Savings, the NTMA seeks a balance between providing customers with a savings option and providing long-term value to the Exchequer in terms of managing the cost of borrowing."
"The NTMA constantly reviews rates to ensure that products remain competitive in the savings market generally, whilst providing good value to the Exchequer in terms of borrowing costs."
NTMA position as stated today:
“In setting interest rates on State Savings, the NTMA seeks a balance between providing customers with a savings option and providing long-term value to the Exchequer in terms of managing the cost of borrowing."
Where exactly did NTMA present the total return as an interest rate ?
Anywhere I look they use the terms “total return“ and “AER” only, never interest rate. These terms are clear enough.
Nobody is locked in. Usually, while the fixed term products are intended for the long term, they can be e cashed without penalty at any time. The only forfeit is the higher interest rates offered in the later years.
And of the course the period of time foregone where no interest was earned.
@Duke of Marmalade Thank you very much for the update spreadsheet. I have used the pervious versions on many occasions over the years and it has been invaluable.
There is one oddity regarding the top prizes. The current documentation says of the prize structure: “A €250,000 prize is awarded in the last draw of March, June, September and December. The top prize in all other draws is €50,000.” So 4 x €250k and 48 x €50k. This morning’s press release says: A top monthly prize of €500,000, in the last weekly draw of every calendar month….. and a top weekly prize of €50,000 in every weekly draw.” So 12 x €500k and 52 x €50k. It would be the first time I am aware of where the top weekly/monthly prize is paid in the month/quarter where the “super” prize is won. We will have to wait until the Terms and Conditions anre published on the 1st October, in the meantime let’s hope that words “mean what they say”.
As others have noted, this is the first time that I ever remember a rate change being announced in advance. I have a savings cert maturing in mid September, I presume that if I delay sending in the renewal form until 1st October, I'll get the new rates? The letter I received states that if instructions are not received by the maturity date, the money will be held until instructions are received and no interest will be paid between the maturity date and the new registration date. However on another line it states that instructions must be received by the maturity date?
Duke of Marmalade
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Thanks. I hope you have downloaded the latest spreadsheet. I noticed many errors in my first attempt. This was caused by the various tweaks to the rules which you have mentioned and especially the change from €50 to €75.
@The Ghoul Unfortunately not. You will get the rate that was on the certificate at the time it was issued. It never changes once issued.
@Freelance I'm talking about a cert which is maturing/finishing in mid September though. I'm aware that if I reinvest it in mid September, I won't get the October rates unless I encash it and then reinvest it again after 1st October. To avoid having this hassle, I propose delaying reinvestment of the matured cert until after 1st October.
@The Ghoul Correct. I interpreted your question as relating to the return on the existing cert. Similar to you I have a cert that matures shortly which I’ll delay rolling over until 1st October.