National Savings and Investments has increased interest rates on its British savings bonds, with rates now exceeding 5% across multiple fixed-term options. The one-year growth bond now offers 4.99%, while the two-year product pays 5.07%. Three-year bonds have been raised to 5.1%, and five-year bonds now pay 5.17%. These products represent rebadged versions of the organization’s guaranteed growth and income bonds, available to both new customers and those with maturing existing accounts.
The heightened competition in the savings market has driven overall interest rates to multiyear highs. However, financial experts caution that such competitive deals tend to be temporary. According to Rachel Springall at Moneyfactscompare.co.uk, providers typically withdraw products from sale once they accumulate sufficient customer deposits. Sarah Coles from AJ Bell notes that while NS&I’s rates are competitive, higher returns remain available elsewhere in the market. The top-paying one-year fixed-rate bond was offering 5.12% at the time of writing, while the highest five-year option reached 5.37%.
NS&I bonds offer several advantages for savers with substantial sums to invest. The maximum investment limit stands at £1 million per person per bond issue, with a £500 minimum. Unlike most banks, which guarantee savings only up to £120,000, NS&I is backed by the UK Treasury and secures 100% of deposits above this threshold. Additionally, funds invested in NS&I are directed toward supporting the UK economy. However, money placed in these fixed-term bonds cannot be withdrawn before maturity.
For those requiring more flexibility, digital bank Starling recently launched an Easy Saver account paying 5% interest for new customers who opened a Starling current account on or after 1 October. This account permits unlimited penalty-free withdrawals, though the rate applies only to balances up to £25,000 and includes a six-month fixed bonus component. Marcus by Goldman Sachs also increased its one-year fixed-rate savings account from 4.3% to 4.75% earlier in the period.
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