IN THESE low interest rate days, savers are scrambling to try and find ways to enhance their nest eggs. Mr R from Dublin is particularly concerned about his Post Office Saving Certificates. "Can Saving Certs, after maturity, be left to earn rather more than would be earned by cashing and reinvesting? And is there any formula for ascertaining the approximate value of certs already held?"
Saving certificates are one of An Post's most popular tax free, guaranteed products and they can be purchased for as little as £10 with a maximum holding limit of £60,000. They don't pay regular interest, but instead pay out the guaranteed return at the end of the savings period most recently, 12th Issue certs were paying out the equivalent of 6 per cent per annum over a five year and nine month term.
The latest interest rate cut means that the 13th Issue certs are paying out the equivalent of 5.5 per cent over five years and six months.
Even though regular interest isn't paid, it is being assigned to your certs at six monthly intervals with the rate rising with each year, i.e. in the case of 12th Issue certs from 4.5 per cent in year one, 4.8 per cent in year two, 5.3 per cent in year three, etc. until an accumulated rate of 6 per cent is reached.
An Post will supply cert holders with this information. A word of caution if our reader intends to encash any of his certificates interest is allocated on set dates every six months so make sure you encash immediately after that date. If you encash even a day before the allocation day, you will lose the previous six months interest.
As for whether leaving his certificates to roll over at maturity rather than encash and reinvest them, will "earn rather more than cashing them in and re-investing", the simple answer is no. Saving certs pay a guaranteed amount of interest over a set period of time and once that period is over, say, five years and nine months, the interest payable on your funds (if you haven't en cashed the certs) will automatically revert to any new rate applying on that new date.
