Boost for savers as interest rates rise for 1.3 million people

The rise will be the highest in almost a decade for the government-backed banks 25 million customers

Over 340,000 savers will benefit from an extra £216 million (Dominic Lipinski/PA)

(PA Archive)

More than 1.3 million people will have a boost to their savings as NS&I increase their interest rates.

The NS&I, or National Savings and Investments, are a government-owned savings bank in the UK and they will be rising the rates paid on some of their various bonds and ISA products from today.

The rise will be their highest in almost a decade for its 25 million customers and comes as the cost-of-living continues to impact millions of Britons.

For people who hold a Direct Saver with NS&I, the rate will more than double from 0.5 per cent to 1.2 per cent, meaning around 340,000 savers will benefit from an extra £216 million in total interest a year.

A further 260,000 customers with Income Bonds account will also see a rise from 0.5 to 1.2 percent, meaning an extra £130 million more in interest a year.

Inflation rose to 40-year highs this year (Yui Mok/PA)

(PA Wire)

For those holding a Direct ISA, rates will rise from 0.35 per cent to 0.9 per cent and around 80,000 people aged under 18 with a Junior ISA will now earn 2.2 per cent from 1.5 per cent.

This is the first increase in interest rates that children have seen since November 2020.

For those who will hold their new Guaranteed Growth Bonds, Guaranteed Income Bonds and Fixed Interest Savings Certificates, they will see an increase effective from 1 August 2022.

The bank said the increased rates will ensure their products are priced appropriately compared with the rest of the savings market and the interests of savers, taxpayers and the broader financial services sector are balanced.

NS&I chief executive, Ian Ackerley, said: “NS&I is one of the largest savings organisations in the UK and we’re pleased to increase our interest rates, helping to ensure that more than 1.3 million savers across the country will see their savings nest eggs boosted.

“Increasing our interest rates means that our products are priced appropriately when compared with the interest rates offered by our competitors.”

But, founder of The Savings Guru, James Blower, told This Is Money: “While it is good news that, at long last, NS&I have responded to the market and increased rates, I don’t think they’ve gone far enough.

“The market is moving upwards fast and, while they look acceptable rates for now, give it another one to two months and they’ll be off the pace again.”