Full Breakdown
NS&I Raises Rates on British Savings Bonds Amid Growing Savings-Market Competition
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Rate Details and Comparison
National Savings and Investments (NS&I) announced higher Annual Equivalent Rates (AER) for its Guaranteed Growth and Guaranteed Income Bonds. The one-year bond now offers 4.99 % AER, the two-year 5.07 %, the three-year 5.10 % and the five-year 5.17 % (gross). These figures place the longer-term bonds just above the 5 % mark for the first time in nearly three years. By contrast, the top-paying one-year fixed-rate bond in the market is 5.12 % and the highest five-year rate is 5.37 %, offered by smaller banks such as Union Bank of India (UK) and GB Bank.
Market Context and Competition
The moves come as competition in the UK savings market intensifies. Digital-only banks have introduced attractive “easy-access” products: Starling’s Easy Saver account delivers a 5 % rate (2.5 % variable plus a 2.5 % fixed bonus for six months) for customers who opened a current account on or after 1 October; existing Starling customers can obtain 4 % with a 1.5 % bonus. Marcus by Goldman Sachs lifted its one-year fixed-rate account to 4.75 %.
Official Position and Security
NS&I emphasizes that its bonds are backed by HM Treasury, guaranteeing 100 % of deposits—unlike most banks, which protect only up to £120,000 under the Financial Services Compensation Scheme. The organisation stresses that the funds are reinvested into the UK economy and that the bonds are “locked in” for the chosen term, with no early withdrawal except in limited circumstances.
Commentary and Cautions
She also warns that attractive deals may disappear if providers attract sufficient deposits, urging savers to keep an accessible emergency fund.
Verbatim Quotes
- “This flexibility could appeal to those who want to supplement their income, as well as savers who would rather leave their interest untouched to benefit from compounding interest.” — Ms Springall