National Savings and Investments has raised returns on its British savings bonds, with multiple products now offering rates above 5% annually. The one-year growth bond increased to 4.99% from 4.82%, the two-year rose to 5.07% from 4.81%, the three-year climbed to 5.1% from 4.83%, and the five-year grew to 5.17% from 4.85%. These bonds are available to new customers and existing account holders with maturing products.
Financial experts caution that attractive savings rates in the current environment tend to be withdrawn quickly once providers accumulate sufficient deposits. Rachel Springall from Moneyfactscompare.co.uk noted that the competitive landscape means desirable products may be pulled from the market rapidly. Additionally, analysts point out that higher rates remain available elsewhere in the market, with some providers offering up to 5.12% on one-year fixed-rate bonds and 5.37% on five-year products, though these typically come from lesser-known institutions.
NS&I bonds offer distinct advantages, particularly for large sums. Investors can deposit up to £1 million per person per bond issue, with a £500 minimum investment. Unlike most banks, which guarantee savings only up to £120,000, NS&I is backed by the Treasury and protects 100% of deposits above that threshold. However, funds invested in these bonds cannot be accessed before the fixed term ends.
For those requiring more flexibility, alternative options have emerged. Starling Bank’s Easy Saver account offers a 5% rate for new customers or those opening a current account after 1 October, though the rate includes a temporary 2.5% bonus lasting six months and applies only to balances up to £25,000. Meanwhile, Marcus by Goldman Sachs increased its one-year fixed-rate account from 4.3% to 4.75%. Financial advisors suggest maintaining some funds in high-paying easy-access accounts for emergencies alongside fixed-term investments.
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