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National Savings and Investments has finally raised rates on some of its easily accessible fixed-income savings plans.
The Direct Saver and Income Bonds now pay 1.8 percent, up 1.2 percent, meaning better rates for about 600,000 savers.
In December 2021, they paid only 0.15 percent. Income bonds are popular with retirees because they pay out income every month.
Rate hike: NS&I’s Direct Saver and Income Bonds now pay 1.8%, up 1.2%, better rates for around 600,000 savers
About 346,000 Direct Isa holders have also seen their rate increase from 0.9 percent to 1.75%. All three of these rate changes take effect immediately.
Anna Bowes, of Savings Champion, says: ‘The move means NS&I has finally become competitive on its easily accessible Direct Saver and Income Bonds.’
On guaranteed growth bonds, it will increase its one-year fix from 1.85 percent to 3.6 percent, which is 175 basis points, the largest of all its gains.
The two-year, three-year and five-year deals will rise to 3.65 percent, 3.7 percent and 3.8 percent, respectively. Meanwhile, guaranteed income bonds pay 3.5 percent over one year, up 1.8 percent.
For the two-, three- and five-year versions, the rates go to 3.55 percent, 3.6 percent and 3.7 percent respectively.
And finally, the two-year fixed-income savings certificates go from 2.15 percent to 3.4 percent, and the five-year version to 3.55 percent.
All these new interest rate hikes will take effect from December 1. However, none of these accounts are currently being sold to new customers.
Savers who already have the bonds can renew them when they mature. Those who have an account that expires before December 1st will be offered the lower rate.
About 22.5 million Premium Bond holders also received a healthy boost after prize money rose to 2.2 percent this month.
The odds of winning have plummeted – from 35,500-1 at the beginning of this year to 24,000-1 now. Meanwhile, the number of prizes of £100,000 and £50,000 up for grabs has almost doubled.
The movements stem from the Bank of England’s key interest rate rising from 0.1 percent in December 2021 to the current 2.25 percent in September. Interest rates are expected to be raised even higher when Bank of England officials meet next week, and again in December.
Ups: Fixed-income savings bonds go from 2.15% to 3.4%, and the five-year version is up to 3.55%
However, there are now a number of easily accessible savings accounts that pay more than 2 percent and are better than NS&I. And despite the improvements, multimillion-dollar rates at NS&I are still incredibly low.
About 1.5 million savers in NS&I’s Investment Account, through the mail, saw their interest rates pushed up yesterday to a paltry 0.4 percent from a dire 0.01 percent.
Ms Bowes adds: ‘Her loyal investment account holders are still treated very badly.’
Savers languishing on these accounts are urged to relocate. The great attraction of NS&I is that all your savings are guaranteed by the government.
With banks and mortgage banks, the maximum amount you can claim under the Financial Services Compensation Scheme if your provider gets into trouble is £85,000, or £170,000 on joint accounts.
NS&I aims to raise £6 billion (plus or minus £3 billion) in the current fiscal year, which runs from 1 April 2022 to 31 March 2023.
Figures from the Bank of England show that NS&I had already raised £2.83bn in the first five months – and that’s before this month’s rise in the Premium Bond price fund from 1.4 percent to 2.2 percent, which may explain the slow step to increase easy access and flat rates.
sy.morris@dailymail.co.uk
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