National Savings and Investments has increased returns on several of its accounts, with many products now offering interest rates exceeding 5%. The move reflects intensifying competition within the savings market, which has produced some of the most attractive rates available in recent years.
According to analysts, the current environment of higher rates may be temporary. Financial experts note that when savings providers successfully attract significant deposits, they often withdraw popular products from the market. NS&I’s British savings bonds, which are rebranded versions of guaranteed growth and income bonds, come in one-, two-, three-, and five-year terms. The one-year growth bond now pays 4.99%, the two-year 5.07%, the three-year 5.1%, and the five-year 5.17%. Interest on growth bonds is paid at maturity, while income bond interest is distributed monthly. Both new customers and those with maturing existing accounts can access these rates.
While NS&I’s rates are competitive, other providers offer higher returns. The top-paying one-year fixed-rate bond currently yields 5.12%, while the highest five-year option reaches 5.37%, though these often come from lesser-known institutions such as Union Bank of India (UK) and GB Bank. NS&I holds a significant advantage for large depositors, allowing investments up to £1 million per person compared to the £120,000 protection most banks provide. Money in NS&I bonds is fully government-backed through the Treasury.
For those preferring access to their funds, alternative options have emerged. Starling Bank’s Easy Saver account offers a leading 5% rate for new customers or those opening current accounts from October onwards, though this applies only to balances up to £25,000 and includes a temporary 2.5% bonus lasting six months. Marcus by Goldman Sachs has also increased its one-year fixed-rate account from 4.3% to 4.75%. Financial advisers recommend maintaining some savings in accessible accounts for emergency expenses while locking larger amounts into fixed-term products.
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