NS&I Introduces New Fixed-Rate Savings Accounts - A Look at the Available Options
In a recent announcement, National Savings and Investments (NS&I) has confirmed that the rate on its one-year British Savings Bonds will remain at 4.05% for both the growth and income option. However, this rate falls short when compared to some competitors offering around 4.43%-4.45% for two-year fixed bonds.
NS&I's new bond offerings aim to balance the interests of savers, taxpayers, and the broader financial services sector. The new two, three, and five-year British Savings Bonds have seen a drop in rates compared to previous issues. The new interest rate on the five-year growth option is 3.84%, down from 4.06%, and the three-year versions of the bonds will offer 3.88%, down from 4.1%.
While NS&I does not appear to offer fixed-rate three- or five-year bonds currently, the best deals for these terms can be found with commercial banks and building societies. The top two-year fixed rate bond on the market pays 4.43% and is offered by Cynergy Bank. The best three-year fixed-rate deal pays 4.45% and is offered by JN Bank, while the best five-year fixed-rate account pays 4.47% and is offered by Birmingham Bank.
It is important to note that unlike Premium Bonds, savings with NS&I are not tax-free. However, all money saved with NS&I is 100% guaranteed by the Government, providing a sense of security for savers.
In addition, NS&I has launched new issues of its one, two, three, and five-year fixed rate savings accounts in April. Savers can put between £500 and £1million into the fixed rate bonds offered by NS&I. Existing customers with maturing bonds can open the new British Savings Bonds, and new NS&I customers are also welcome to participate.
For those prioritising government-backed security, NS&I is a safe choice. However, for higher returns on two-year bonds, some commercial banks offer better fixed rates currently. For three- and five-year terms, you will likely have to consider commercial providers or wait for NS&I to release products.
References: [1] Financial Services Compensation Scheme (FSCS) - [2] NS&I’s two-year Guaranteed Growth and Income Bonds now pay 3.85% AER -
In the realm of personal-finance, individuals seeking higher returns on their savings might find better deals with commercial banks for two-year fixed bonds, as demonstrated by Cynergy Bank offering a rate of 4.43%. For three- and five-year terms, it's advisable to consider commercial providers or wait for NS&I to introduce new products, as their current offerings under the five-year growth option stand at 3.84%.
