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NS&I relaunches bonds with highest rates since 2010

Money in a jar with a safe.jpeg
Money in a jar with a safe.jpeg

NS&I savings rates have hit their highest for more than a decade, with the state-backed bank now paying customers up to 4pc in annual interest.

The 162-year-old institution has brought back on general sale its one-year fixed "Guaranteed Growth Bonds" and "Guaranteed Income Bonds" for the first time since 2019, paying up to 4pc and 3.9pc respectively.

The savings bank previously came under fire when it stopped offering the accounts four years ago. They paid some of the best rates on the market at the time.

The new offering boasts the highest NS&I savings rates on offer since 2010. Back then its growth bonds paid 3.2pc, while its income bonds offered savers 3.15pc.

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It means NS&I now offers competitive interest rates for savers looking to lock away their money for 12-months, although savers can earn 0.16 percentage points more in annual interest via one-year deals at rival providers.

The one-year fixed bonds allow savers to invest between £500 and £1m in each issue for 12 months, before having the opportunity to withdraw or reinvest.

Close to half a million one-, two-, three- and five-year "Guaranteed Growth Bonds", "Guaranteed Income Bonds" and "Fixed-Interest Savings Certificates" accounts may too benefit from the new rates when their investments mature, should they then choose to reinvest. The two-, three- and five-year offerings are only available for existing customers with maturing products.

Savers money is fully protected, unlike other banks which can only guarantee deposits of up to £85,000 will be guaranteed under the Financial Services Compensation Scheme, a lifeboat fund, in case of collapse.

Ian Ackerley, of NS&I, said: "It’s continuing to be an exciting time for savers and I’m pleased that we are able to bring back on general sale our popular one-year fixed-rate Bonds with two new Issues. Existing customers may also gain from a better deal when their current Bonds mature, with the option to renew with a higher interest rate."

"At the same time, by offering two new Issues today, we are continuing to balance the interests of savers, taxpayers and the broader financial services sector to support our Net Financing target which contributes to the funding of public services."

Experts have urged savers to lock in deals now, as providers have already begun reducing rates in anticipation of rates peaking sooner than previously expected.

Rachel Springall, of Moneyfacts, a comparison site, said the top deals had already begun to fall.

"Challenger banks traditionally compete at pace to secure savers’ deposits to fund their future lending on fixed-rate bonds, but as the expectations surrounding future central interest rate rises have eased, these rates have subsequently been cut, and some providers pulled out entirely from the market.

"There has been a notable rate drop on longer-term fixes and this arena could worsen further," she added.

The best bond rates on the market

One-year fixed rate: SmartSave 1 Year Fixed Rate Saver – 4.16pc

You can save between £10,000 and £85,000 in this account.

Two-year fixed rate: Atom Bank 2 Year Fixed Saver – 4.45pc

You can save between £50 and £100,000 in this account.

Three-year fixed rate: Atom Bank 3 Year Fixed Saver – 4.45pc

You can save between £50 and £100,000 in this account.

Five-year fixed rate: Isbank Raisin UK - 5 Year Fixed Term Deposit – 4.50pc

You can save between £1,000 and £85,000.