National Savings and Investments has launched a range of fixed-rate bonds with boosted rates for those wanting to lock their money away for a better return.
The Treasury-backed bank has launched new issues of its Guaranteed Growth Bonds and Guaranteed Income Bonds, collectively known as British Savings Bonds.
Savers will now be able to open new one, two, three and five-year bonds. The new issues pay a better interest rate than their previous issues.
The new issues are available to both new customers and existing customers with maturing bonds.
The new one-year fix will pay 4.2 per cent, up from the previous rate of 4.05 per cent.
The two and three-year versions of the bonds have now been boosted to 4.1 per cent and 4.16 per cent respectively, meaning the one year fix offers a better rate despite being a shorter term deal.
NS&I has boosted the rate on its fixed-rate bonds with a crop of new issues
The new interest rate on the 5-year growth and income options is 4.15 per cent.
The move comes as NS&I was handed a new, bigger fundraising target of £12billion, within a range of plus or minus £4billion for 2025-26.
Its fundraising target for the 2024-25 was £9billion with wiggle room of +/- £4billion by comparison, and NS&I announced it was on track to raise £10.5billion in its Q3 results.
How do NS&I rates compare?
Although the rates have been boosted, they still fall short of the best-buy fixed rate savings deals.
James Blower, founder of website the Savings Guru says: The new rates from NS&I are much improved and the one year, in particular, is competitive compared to the market at 4.2 per cent compared to the current best buy of 4.47 per cent. There will always be better rates available away from NS&I but, in fairness to them, this new suite of rates are around 0.25 per cent to 0.3 per cent below the current best buys in most of the terms they are offering.’
Caitlyn Eastell, of Moneyfacts Compare says: ‘Savers looking for the most competitive rates would do better to shop elsewhere as challenger banks currently offer some of the best rates.’
The top one-year fixed rate bond on the market pays 4.41 per cent and is offered by DF Capital, compared to NS&I’s 4.2 per cent one-year bond.
> Best fixed-rate savings accounts: Compare the top deals using our tables
Savers can also do better than NS&I’s two and three-year bonds by keeping their cash in one of the best two or three-year fixed-rate deals. These offer 4.39 per cent and 4.44 per cent respectively.
The best five year fixed-rate account pays 4.4 per cent and is offered by JN Bank compared to NS&I’s 4.15 per cent five-year deal.
Unlike other savings accounts, all money kept in NS&I’s savings accounts is 100 per cent guaranteed by the Government.
This means savers don’t have to spread their money between a number of savings accounts in order to make sure it is all protected, in the event that the provider goes under.
When using normal savings accounts with a bank, deposits are protected up to £85,000 per bank – so those with more money than that are advised to open multiple accounts with different institutions.
NS&I is not able to offer the highest savings deals on the market to avoid skewing it.
Andrew Westhead, NS&I retail director, said: ‘Today’s changes ensure we continue to balance the interests of savers, taxpayers and the broader financial services sector.’
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