NS&I boosts interest rates on fixed-term savings products
NS&I is raising interest rates on some of its fixed-term savings accounts by up to 1.15%: here’s how they compare to the best deals
Government-backed savings bank NS&I has raised interest rates on some of its term accounts by up to 1.15 percent.
Popular one-year guaranteed growth bonds are up from 4 percent to 5 percent, while guaranteed income bonds are up from 3.97 percent to 5.12 percent.
Savers opting for the one-year guaranteed growth bonds will need £500 to get started and can deposit up to £1m into the Treasury-backed account.
Rate hike: popular one-year guaranteed growth bonds have seen their yields rise to 5%
However, they cannot withdraw money until the bond reaches maturity.
A person who puts £10,000 in this account will earn £500 in interest over the course of the year.
The Guaranteed Income Bonds work in much the same way, except they pay interest every month.
Meanwhile, NS&I’s two-year and three-year Guaranteed Growth Bonds and Guaranteed Income Bonds will also rise to 5.10 percent as of today, albeit only for existing clients reaching the end of a previous firm deal.
The changes to NS&I’s fixed-term products come two weeks after it announced rate hikes on some of its variable products, which also take effect today.
NS&I customers with Direct Saver and Income Bonds will see the return on their savings increase from 2.85 percent to 3.4 percent as of today.
Dax Harkins, CEO of NS&I.
These accounts can appeal to anyone who wants the ability to access their money whenever and wherever they want.
Dax Harkins, CEO of NS&I said: ‘Guaranteed Growth Bonds and Guaranteed Income Bonds are popular with our clients and I am pleased to announce these changes today to benefit new and existing clients.
“Customers holding Direct Saver and Income Bonds will also see a boost from today, with their interest rates rising, and millions of Premium Bonds holders will also have a higher chance of winning a prize in the next drawing.
“Clients who already have one-year Guaranteed Growth Bonds and Guaranteed Income Bonds will remain at their original fixed interest rate, but at the end of the term they can switch to a new term at the then offered rate.”
It is also worth noting that from August the premium rate of the Premium Bonds prize funds will also increase from 3.7 per cent to 4 per cent, with the probability of each £1 bond winning improving from 24,000 to 1 to 22,000 to 1.
How do they relate to the savings market?
If you’re looking for the market-leading rate, you probably won’t like NS&I’s new deals.
The average one-year fixed rate currently pays 5.03 percent, according to Moneyfacts, which is broadly in line with what NS&I is paying now.
However, savers can do much better on the fixed-rate savings market. Check out the best fixed rate savings deals here.
The best one-year fix is currently offered by Monument Bank and pays 6.05 percent.
A person who puts £10,000 into this account will earn £620 in interest over the course of the year.
NS&I’s Direct Saver and Income Bonds, which allow savers to withdraw their money as and when they want, also fall short of the best easy-to-access savings deals offered by banks and building societies.
The best easily accessible rates now pay north of 4.25 percent. View the best easy-access rates here.
While most savings accounts offer FSCS deposit protection of up to £85,000 per person (or £170,000 in the case of joint accounts), all products offered by NS&I offer 100 per cent capital security, backed by the Treasury, so in the end they could still be attractive for people with large amounts of savings.