NS&I Index-Linked Savings Certs Early Encashment

[Stompa]

I'm currently deciding whether to roll over some existing certificates, and wanted to see exactly what the early encashment penalties would be should I need to cash them in early. Can somebody clarify exactly how early encashment (full rather than partial) works please.

According to NS&I:

If you do need access to your money before the end of the term, you can cash in all or part of your Certificate early, but we will deduct a penalty from your payment. The penalty will be equivalent to 90 days’ interest on the amount you cash in.

Also, you won’t earn any index linking on the whole Certificate for the investment year in which you cash in, even if you only cash in part of your Certificate.

Firstly, am I correct in thinking that the "90 days’ interest" referred to would be 90 days at CPI + 0.01%?

And secondly, am I correct in thinking that if I were to cash in at (or just after) an anniversary the loss of index linking would be zero (or very small)?

Thanks

[Dod101]

I do this occasionally but frankly the interest gained or lost at any one time is currently so insignificant that I just ignore it. That is the practical answer. For a theoretical one I cannot help.

Dod

[mc2fool]

Firstly, am I correct in thinking that the "90 days’ interest" referred to would be 90 days at CPI + 0.01%?

Nope, the CPI is the index linking, the interest is just the 0.01%.

And secondly, am I correct in thinking that if I were to cash in at (or just after) an anniversary the loss of index linking would be zero (or very small)?

That's the way I read it.

[mutantpoodle]

and note...if you cash in more than £50,000 in one go it will take ages and ages, as they let it queue in ordinary way for encashment, then eventually when it arrives at top of queue...they see it is large and transfer it to a separate queue...where you wait again
it took me 4 months last year
including complaints and various letters of excvuse!

[chas49]

If you cash in the whole bond, just after an anniversary, you'll only miss out on the interest. And the tiny bit of index-linking between the anniversary and the encashment.

OTOH, if you partially encash, you'll lose all the index-linking on the whole balance for the whole year. Depending on the relative amounts of encashment and remaining balance, this might be a little more significant I suppose.

[yorkshirelad1]

I'm currently deciding whether to roll over some existing certificates, and wanted to see exactly what the early encashment penalties would be should I need to cash them in early. Can somebody clarify exactly how early encashment (full rather than partial) works please.

According to NS&I:

If you do need access to your money before the end of the term, you can cash in all or part of your Certificate early, but we will deduct a penalty from your payment. The penalty will be equivalent to 90 days’ interest on the amount you cash in.

Also, you won’t earn any index linking on the whole Certificate for the investment year in which you cash in, even if you only cash in part of your Certificate.

Firstly, am I correct in thinking that the "90 days’ interest" referred to would be 90 days at CPI + 0.01%?

And secondly, am I correct in thinking that if I were to cash in at (or just after) an anniversary the loss of index linking would be zero (or very small)?

Thanks

Can't help with early encashment penalties as I've never done early encashment except on death of the holder where the early encashment penalties don't apply.
Customer service at NS&I is not quick or efficient any more, as noted by mutantpoodle, and is also my experience.

[Stompa]

So it sounds like encashing an entire certificate at or just after the anniversary will suffer a penalty of around 0.0025%, and a miniscule bit of index-linking. It doesn't really seem like a penalty at all!

Given that I'm happy to wait until an anniversary, and encash certificates in full, rolling over seems like a no brainer.

Thanks all.

[yorkshirelad1]

So it sounds like encashing an entire certificate at or just after the anniversary will suffer a penalty of around 0.0025%, and a miniscule bit of index-linking. It doesn't really seem like a penalty at all!

Given that I'm happy to wait until an anniversary, and encash certificates in full, rolling over seems like a no brainer.

Thanks all.

Please be very clear about the difference between "cashing in" and "rolling over" (hope I'm not stating the obvious to you, but just in case it avoids confusion for you later!)
New ILSCs are only available to holders of existing savings certificates. New ILSCs are not available for fresh cash purchase.
So if you "cash in", take the cash away, then go back later and want to buy some more ILSCs, you will not be able to do that.
But if you issue instructions to roll over into the new ILSC (or, as is the case now, the default no-action option is for existing maturing ILSCs to just roll over into the equivalent currently available ILSC) that's fine.

The propensity for confusion is quite high, especially when dealing with NS&I CS. If you intend to roll over, it might be best to avoid the words "cash" and "out" anywhere within hearing of NS&I.