SYLVIA MORRIS: NS&I deals I’d snap up now… and the duds I’d dump!

National Savings & Investments is increasing savers’ chances of winning Premium Bond prizes this summer by raising the prize fund percentage to 4 percent – the highest level since 2007.

The odds of winning a monthly prize have been reduced to one in 22,000, the best in nearly 15 years. The number of £100,000 prizes rises by six to 77 this month, while the £50,000 prizes rise from 13 to 154. There will be an estimated 1,875,589 prizes of £50 and £100 each.

NS&I also increases the prize money percentage for the fifth time this year in August. This comes shortly after this month’s increase, as NS&I is finally catching up with rising interest rates. But not all savers come out on top.

In the quarter century that I’ve been writing about saving for Money Mail, we’ve said goodbye to the days when savings providers offered a simple assortment of accounts and we’ve been dumbfounded by marketers who introduced complicated schemes with piles of terms and conditions.

During decades of financial instability, NS&I was considered our nation’s national treasure. I remember back in the 1980s when the investment account was among the top payers. I even opened one myself.

Like many savvy savers, I abandoned mine when better rates became available with online accounts.

But NS&I has always maintained advantages over other savings providers. As part of the government, it guarantees that all your hard-earned money is safe.

Other providers can only provide up to £85,000 per person under the Financial Services Compensation Scheme if they go out of business.

Since Premium Bonds launched in November 1956, it has given out hundreds of thousands of tax-free prizes every month. In August, it expects to award 5,520,000 prizes ranging from £25 to £1 million.

They have become a roaring success. It’s amazing to think that 22.4 million of us – about a third of the UK’s population – hold them.

The minimum bet is £25 and the maximum bet is £50,000. And if you don’t win, you don’t lose your bet — your bonds just roll over to the next monthly draw.

There is a gem among the National Savings Accounts, which 329,000 savers still enjoy.

His index savings certificates have not been for sale for 12 years, but savers who bought them can roll them over to new certificates for another two, three or five years.

Savvy savers have done just this. NS&I tells me an eye-watering £17.9bn has been invested, compared to £17bn a year ago.

They earn the Consumer Price Index plus 0.01 percent. With a CPI currently at 8.7 percent, savers earn great returns, all tax-free.

Expert: Sylvia has been writing about savings deals for over a quarter of a century

NS&I naturally also has a downside. It rarely appears in best buy charts and it doesn’t want to.

The primary job is to encourage us all to save, but let’s not forget that the goal is also to raise money for the government.

So if it paid top rates, it would distort the savings market and take money away from other institutions.

In turn, they would have to compete with higher rates.

That means borrowers would have to spend more of their income on interest on their mortgages, loans, and credit card debt, leaving less to spend on other things — and that could throw the economy off track.

It must also ensure that it pays a fair interest rate to depositors.

In my opinion, it doesn’t pay depositors enough on many of its accounts. While some accounts are rated “good,” others are downright sloppy.

Here’s my guide to the best and worst NS&I deals…

Check out the best savings rates in our independent best buy tables compiled by Sylvia Morris and This is Money

Premium Bonds

The price percentage on Premium Bonds rose for the second month in a row from 3.7 percent in July to 4 percent in August. A further £30 million in prizes are available.

This is a sharp increase compared to the end of 2022, when the prize percentage was only 2.2 percent. However, the jump comes after the pace of new investment by savers has slowed.

At this week’s July draw, some 22.4 million depositors held £121.47bn in bonds, up just £460,451 from the previous month – but £706m of new money was paid in bonds in May .

Premium Bonds are exclusive to NS&I and give you the chance to win tax-free prizes. Next month, each £1 bond has a one in 22,000 chance of winning. You can buy it for yourself or as a gift for someone else.

PRONUNCIATION: A good bet for your savings if you accept that you may not win anything at all.

Income Bonds

Holders of these will see their rate rise on July 13 — by 0.55 percentage point to 3.4 percent.

Nearly half a million savers have easy access to their money. Income bonds, which you can buy online or over the phone, are usually popular with retirees because they pay interest each month.

Once the rate increase takes effect, they’ll pay one of the highest monthly rates for easy-to-access accounts that you can manage over the phone.

Among its competitors, the best rate comes from Skipton Everyday Saver at 3.54 percent. If you’re willing to go online, Investec pays an even better 4.12 percent.

PRONUNCIATION: With a monthly income of 3.4 percent on a clear account, this is a competitive rate.

Competitive: Income bonds, which you can buy online or over the phone, are usually popular with retirees because they pay interest every month

Guaranteed growth bonds

Some 37,000 savers were seduced by this bond. The current one-year fixed-interest version pays 4 percent.

PRONUNCIATION: The yield has been fixed since February, while the base interest rate has risen from 3.5 percent to 5 percent.

Top bonds, such as those from SmartSave and Cynergy banks, pay nearly a third more, about 6 percent.

Guaranteed income bonds

These are the same as Guaranteed Growth Bonds, but your interest is paid each month at a slightly lower rate of 3.9 percent.

This lags behind the market, where competitors such as Atom pay more than 5.5 percent.

PRONUNCIATION: At 3.9 percent, the bonds offer meager returns for those looking for a monthly income.

Green Savings Bonds

You commit your money – a minimum of £100 for three years – and the money raised is spent on green projects.

This is NS&I’s newest online-only savings account and has courted 28,000 enthusiasts since its launch in October 2021.

It pays 4.2 percent fixed for three years against a top 5.95 percent from rivals Close Brothers Savings.

PRONUNCIATION: Good for those who like to waive interest to support green projects chosen by the government.

Better odds: the chance of winning a monthly Premium Bond prize has been reduced to 1 in 22,000 – the best in almost 15 years

Investment account

The 1.4 million savers in the Investment Account, once the hub of NS&I’s savings range, only receive an increase of 0.25 percentage point.

This meager increase will bring their rate to a paltry 0.85 percent, one of the worst out there, and it’s the first increase this year.

The new rate was announced just days after the Chancellor, Jeremy Hunt, criticized the big banks for not passing higher interest rates on to depositors.

But NS&I, which falls under the wing of the Treasury, pays one of the worst rates available.

It’s even worse than Halifax, which only offers 0.95 percent on its Everyday Saver account

PRONUNCIATION: Bad at 0.85 percent – dump it now!

Direct saver

This is a standard easy access account held by 368,000 savers that you can access and manage online or over the phone.

This allows you to deposit money with your debit card or online from your checking account. The rate will rise to 3.4 percent from next week.

The highest rate on an easily accessible online bill comes from Family BS at 4.35 percent.

But if you prefer to manage your account over the phone, the gap isn’t that big. Top rates include Skipton’s Everyday Saver of 3.6 percent.

PRONUNCIATION: The rate is quite reasonable – and some people feel safe saving with the government.

Fair deal: The Direct Saver account allows you to fund with your debit card or online from your checking account. The rate rises to 3.4% from next week

Direct Is

Approximately 332,000 savers enjoy tax-free savings in this easy-to-access Isa account, which you can access and manage online or by phone. They earn only 2.4 percent, but rivals pay a whopping 3.85 percent.

Cynergy Bank pays this on its Online Isa, while Skipton BS offers 3.8 percent on its Cash Isa which you can use by phone, mail, online or in its branches.

The NS&I Direct Isa pays a whole percentage point less than the NS&I Direct Saver.

Both work the same way. The only difference is that your interest in the Isa is automatically tax-free, but you may have to pay tax on the Saver.

PRONUNCIATION: Even if you had to pay 20 percent base rate tax on the 3.4 percent Direct Saver, you’d end up with more (2.7 percent) than you would here.

sy.morris@dailymail.co.uk