NS&I launches new two and five-year fixed-rate bonds
- NS&I launches new two and five-year fixed-rate British Savings Bonds
- The accounts were last on offer 15 years ago
- It has also boosted the rate on its three-year bond, for new savers only
It has been 15 years since savers were able to open new two- or five-year fixed rate savings accounts from NS&I.
But that has all changed, as today the Treasury-backed savings bank has launched new two- and five-year fixed-rate versions of its British Savings Bonds.
Savers will now be able to open two-year British Savings Bonds paying a rate of 4.6 per cent if they opt for interest paid annually, or 4.5 per cent for the monthly income version.
New arrivals: NS&I has launched 2- and 5-year British Savings Bonds and boosted the rate on its 3-year British Savings Bond
Five-year British Savings Bonds will pay 4.1 per cent interest, or 4.02 per cent for the monthly income version. These accounts were last on sale to new savers in October 2009.
NS&I has also boosted the rate on its existing three-year British Savings Bonds, but for new savers only.
The rate on the three-year bonds has been boosted to 4.35 per cent from 4.15 per cent.
Customers who already have the three-year version will continue to receive a rate of 4.15 per cent.
It follows NS&I’s announcement of an exclusive new rate for the 220,000 savers who piled £10billion into one-year issues of National Savings & Investments best-ever Guaranteed Growth and Income Bonds last year.
What are NS&I’s British Savings Bonds?
British Savings Bonds are fixed-term versions of NS&I’s Guaranteed Growth Bonds and Guaranteed Income Bonds.
These accounts are open to new savers who pay at least £500 into the bonds as a starting investment. The maximum a saver can invest is £1million.
NS&I chief executive Dax Harkins said: ‘It is 15 years since we last had two- and five-year fixed-term bonds on general sale to new investments.
‘Today’s changes will help us to meet our Net Financing target while continuing to balance the interests of savers, taxpayers and the broader financial services sector.’
NS&I has around £21.4billion invested in Guaranteed Growth Bonds from 477,000 customers and around £7.5billion invested in Gauranteed Income bonds from 81,000 customers as of 31 March 2024.
The new bonds will help NS&I meet its net financing target – in other words the money it is expected to bring in for the Treasury. NS&I last week announced a net financing target of £9billion, within a range of plus or minus £4billion, for 2024/25.
How do they stack up to other savings accounts?
The new bonds do not offer as much interest as the market-leading savings accounts, but they are still likely to be popular with savers.
Andrew Hagger, founder of MoneyComms said: ‘The new two- and three-year rates are quite a way behind current best buys from RCI Bank at 5 per cent and 4.76 per cent respectively – although these may not be around too much longer following the base rate cut last week.
‘Some savers may want to lock in a decent rate for longer bearing in mind more rate cuts are predicted in the coming six to nine months.
‘These products will no doubt appeal to those with balances in excess of the £85,000 FSCS limit.’
Any money put in to NS&I is 100 per cent guaranteed by the Treasury.
The best two-year fixed-rate accounts pay more than 5 per cent interest, This is Money’s independent savings tables show.
Access Bank is offering a two-year fixed-rate account paying 5.06 per cent. A saver putting £10,000 in this account would have £11,063 at the end of the two-year term, according to This is Money’s savings calculator.
A saver tucking away £10,000 in NS&I’s new two-year deal would have £10,962 by the end of the two-year term.
The best three-year fixed rate account currently pays 4.67 per cent and is offered by RCI Bank. A saver putting £10,000 in this account would have £11,532 by the end of the three-year term, while a saver putting into NS&I’s new 4.35 per cent three-year rate would have £11,391.
The best five-year fixed-rate accounts pay more than 4.5 per cent interest. The best of the best comes from Hampshire Trust bank, which pays 4.55 per cent interet.
A saver stashing £10,000 in this account for five years would have £12,549 at the end of the term while a saver stowing this amount in NS&I’s five-year deal would have £12,271 at the end of the term.
With an NS&I savings account, because they are backed by the Treasury, any money you invest is 100 per cent protected.
Even if you invest more than the amount backed by the Financial Services Compensation Scheme (FSCS) – up to £85,000 per person or £170,000 for joint accounts.
British Savings Bonds are taxable, unlike some NS&I products such as Premium Bonds.
> Fixed-rate accounts: See this is Money’s best buy tables
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