NS&I puts British Savings Bonds on sale – but experts say savers can still do better

Finance experts pointed out that savers can get products with higher rates on the wider market

Albert Toth
Thursday 04 April 2024 12:04 BST
British Savings Bonds, which were unveiled in the spring Budget, have gone on sale (Dominic Lipinski/PA)
British Savings Bonds, which were unveiled in the spring Budget, have gone on sale (Dominic Lipinski/PA) (PA Archive)

NS&I have put their British Savings Bonds on sale after Chancellor Jeremy Hunt unveiled them in the spring Budget.

British Savings Bonds are new three-year fixed-rate issues of Treasury-backed savings giant NS&I’s Guaranteed Growth Bonds and Guaranteed Income Bonds, offering a 4.15 per cent rate.

They offer savers a guaranteed interest rate fixed over three years for investments between £500 and £1 million. Money cannot be withdrawn until the end of the term.

NS&I said the intention is for the new British Savings Bonds to be available for an extended period of time. They are available to buy online at nsandi.com.

As with NS&I savings generally, the money invested has 100 per cent security, backed by Treasury, and is invested back into supporting the UK through Government financing.

However, finance experts pointed out that the 4.15 per cent rate on offer with the three-year products sits below the top deals available in the wider savings market, meaning the products “risk disappearing without a trace”.

UK savers looking for lucrative fixed-term savings accounts have many options that offer rates of 5 per cent and above, according to research by Money Saving Expert. For instance, Zenith Bank UK currently offers saver a 4.67 per cent three-year fixed-term rate.

Best UK savings accounts

According to research by MSE

  • SmartSave via Flagstone – 5.21% for six months
  • Hampshire Trust Bank – 5.06% for nine months
  • MBNA – 5.2% for one year
  • DF Capital – 5.07% for two years
  • Zenith Bank UK – 4.67% for three years

Sarah Coles, head of personal finance, Hargreaves Lansdown, described the rates on the new bonds as “disappointing”.

“NS&I British Savings Bonds may well be doomed to mid-table mediocrity,” she says. “At this rate, these bonds risk disappearing without a trace.”

“Easy access and short-term fixed accounts offer higher rates right now, because longer fixes factor in expectations that interest rates will fall during the term. However, at the moment, there are decent rates available on longer fixes that are worth considering.”

“There will be some interest in these bonds. The fact you can hold up to £1 million will appeal to those with huge savings balances, because this is 100% guaranteed by the Treasury”.

Bim Afolami, Economic Secretary to the Treasury, said: “This is a new opportunity for UK savers to benefit from the three-year fixed-rate British Savings Bonds knowing that their money is fully protected by HM Treasury.”

“The bonds will help to grow the savings culture in the UK while providing cost-effective financing for the Government.”

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