NS&I reveals details of exclusive rate for 220,000 savers who opened last year at 6.2% rate

If you are one of the 220,000 savers who last year put £10bn into National Savings & Investments’ best-ever Guaranteed Growth and Income Bonds, you’re in luck.

NS&I will write to offer a new one-year Guaranteed Growth Bond at 5.15 per cent interest or a Guaranteed Income Bond at 5.03 per cent interest, we can announce.

The offer is exclusive to existing bondholders and will be available once their current bond matures, from the end of next month.

NS&I launched the original one-year version of the Guaranteed Growth Bonds and Guaranteed Income Bonds in August last year with a yield of no less than 6.2 percent. This interest rate indicated that the market was at its peak.

This was by far the highest interest rate on the market at the time and outpaced the competition.

NS&I raised £11.3 billion in net funding for the government in the 2023/24 financial year, the Treasury-backed bank revealed in its latest annual report and accounts.

This means the funding target of £7.5 billion has been exceeded, with a margin of plus or minus £3 billion, equivalent to between £4.5 billion and £10.5 billion.

The 6.2 percent Guaranteed Growth & Guaranteed Income Bonds proved to be a great success with savers.

Dax Harkins, CEO of NS&I, said: Last summer we fell significantly short of our net funding target, despite successive rate increases across our variable and fixed products.

‘In response, we have launched new one-year issuances of our popular Guaranteed Growth Bonds and Guaranteed Income Bonds.’

Thanks to the market-leading interest rate, more than 220,000 savers deposited £10 billion into these savings accounts.

Should you stick with the NS&I solution or twist it?

NS&I appears keen to hold on to bondholders’ money, given the company has had a poor start to meeting its funding target so far this year.

The interest rates on the new version of the bond are not as generous as the 6.2 percent and 6.03 percent that bondholders have enjoyed, but they are still competitive compared with other deals on the market.

According to This is Money’s savings calculator, a saver who invests £10,000 in NS&I’s new version of the Guaranteed Growth Bond would have £10,527 left after a year.

NS&I confirmed that a customer can only reinvest the money that is already in one of the bonds launched last year. If they want to invest new money, they can choose to switch to a different term.

The best alternative is a one-year bond with 5.4 percent interest from Union Bank of India.

A saver who puts £10,000 in this account for a year would still have £10,554 at the end of the term.

This is followed by GB Bank, which pays 5.26 percent per year.

A saver has £10,539 left after one year on an initial investment of £10,000.

With an NS&I savings account, all the money you invest is 100% protected, as it is backed by the Treasury. What’s more, up to £1 million has been invested through these bonds.

Even if you invest more than the amount covered by the Financial Services Compensation Scheme (FSCS) – up to £85,000 per person or £170,000 for joint accounts.

Guaranteed Growth Bonds and Guaranteed Income Bonds are both taxable, unlike some NS&I products.

This means that savers must be alert to exceeding their personal savings limit.

The new one-year bond is not available to new NS&I bond customers. However, they can buy a three-year bond at 4.15 percent.