State Savings Rates Cut: Full Details
- Thread starter Lightning
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state savings
Hi Ciaran
If I have already a savings bond can I top it up at the old rates. I also feel quite annoyed at the state savings doing this for one simple reason and it's this, People like myself and others have bailed out the bank through our tax money being shoveled into them and I feel the ntma should have kept their rates so that these banks would have to compete, this is the only way tax payers and ever going to get anything back from the banks.
Hi Ciaran
If I have already a savings bond can I top it up at the old rates. I also feel quite annoyed at the state savings doing this for one simple reason and it's this, People like myself and others have bailed out the bank through our tax money being shoveled into them and I feel the ntma should have kept their rates so that these banks would have to compete, this is the only way tax payers and ever going to get anything back from the banks.
No, each bond, cert or Solidarity Bond is its own fixed term deposit and the interest is whatever the current rate is.
The process for buying additional Solidarity Bonds can give the impression of giving a top up facility however this is not the case. Each time you "put money into a Solidarity Bond" you're buying a new one, not topping up an existing one.
No, there is no possibility of getting the old rates if you post today.
From above:
'All applications for purchases received in a post office or mailed prior to 16 December 2012 will receive the old rates'
Anything posted to-day will have to-day's or tomorrow's date stamp on them.
Re: prize bonds, does "2.25% of total value of all prize bonds outstanding" constitute a cut in the "rate of interest". Was this percentage a higher figure previously? I have had a quick look online but haven't found anything.
I know many people here do not like prize bonds and the 2.25% "average" interest rate is probably misleading and skewed by the tiny number of very big prizes. But still, with other State Savings rates and bank rates dropping and DIRT gone up, Prize Bonds are looking a bit better.
I know many people here do not like prize bonds and the 2.25% "average" interest rate is probably misleading and skewed by the tiny number of very big prizes. But still, with other State Savings rates and bank rates dropping and DIRT gone up, Prize Bonds are looking a bit better.
A
Abbey_Street
Guest
I've recalculated the gross AER equivalents for these products as follows:
* 3 Year Savings Bonds: 3.55%
* 4 Year National Solidarity Bond: 3.97%
* 5 Year Savings Certificate: 4.45%
* 10 Year National Solidarity Bond: 5.55%
* Instalment Savings: 4.54%
If someone could verify these, it would be appreciated?
Assumptions:
1. Tax on deposit interest is 33% in year 1 and 37% thereafter (deposit interest becomes eligible for PRSI in 2014).
2. Annual interest on National Solidarity Bond is not re-invested.
On the face of it, these rates don't look too bad relative to the rest of the market. However the question will be whether people are willing to stomach these low rates in return for taking the reasonably high risk involved in locking money for these periods (i.e. inflation, lack of liquidity). The early exit penalties are much heavier now (e.g. 0.7% interest in year 1 on savings bonds versus 2.2% previously).
* 3 Year Savings Bonds: 3.55%
* 4 Year National Solidarity Bond: 3.97%
* 5 Year Savings Certificate: 4.45%
* 10 Year National Solidarity Bond: 5.55%
* Instalment Savings: 4.54%
If someone could verify these, it would be appreciated?
Assumptions:
1. Tax on deposit interest is 33% in year 1 and 37% thereafter (deposit interest becomes eligible for PRSI in 2014).
2. Annual interest on National Solidarity Bond is not re-invested.
On the face of it, these rates don't look too bad relative to the rest of the market. However the question will be whether people are willing to stomach these low rates in return for taking the reasonably high risk involved in locking money for these periods (i.e. inflation, lack of liquidity). The early exit penalties are much heavier now (e.g. 0.7% interest in year 1 on savings bonds versus 2.2% previously).
To avoid constantly having to re-weight the grossed up rates as PRSI looms, I have taken 37% as the notional tax rate for deposit interest as PRSI will be applied to normal deposit interest during most of the term.
Taking 37% as the notional deposit interest tax rate:
3 years: 2.82%/63 = 3.62% grossed up AER.
4 years: 2.57%/63 = 4.10% grossed up AER.
5 years: 2.83%/63 = 4.49% grossed up AER.
10 years: 3.55%/63 = 5.63% grossed up AER.
Another method would be to weight 30% by the number of days left in 2012, weight 33% by 365 days (and constantly update it as 2013 progresses) and 37% by the remainder of the term (which might have higher rates anyway in 2014+).
37% seems a fair enough way to gross it up.
Taking 37% as the notional deposit interest tax rate:
3 years: 2.82%/63 = 3.62% grossed up AER.
4 years: 2.57%/63 = 4.10% grossed up AER.
5 years: 2.83%/63 = 4.49% grossed up AER.
10 years: 3.55%/63 = 5.63% grossed up AER.
Another method would be to weight 30% by the number of days left in 2012, weight 33% by 365 days (and constantly update it as 2013 progresses) and 37% by the remainder of the term (which might have higher rates anyway in 2014+).
37% seems a fair enough way to gross it up.
Banks were losing money on the rates that they were charging, its only over the last year that statev savings have become competitive. Disappointing to see rates cut with immediate effect. It is going to be very hard to get an account now that will keep ahead of inflation
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It now appears that the government doesnt want people to save and instead spend all their money