NS&I makes quiet Bonds change which 'won't attract new customers'

NS&I has quietly increased its interest rates - including the new British Savings Bonds rate. NS&I increased the interest rate for Direct Saver to four per cent AER from 3.65 per cent AER, on May 23, 2024, the financial provider - which is backed by the Treasury - has confirmed.

The Income Bonds also increased to 3.93 per cent gross/four per cent AER from 3.5 per cent gross/3.65 per cent AER. James Blower at the Savings Guru, said: “The increases are probably enough to improve retention but not attract new balances.”

He said: “Had they not done this, they’d have been reporting good outflows when their Q1 results were announced in July." He added: “Don’t expect any further changes now until after the election – it is likely these increases were decided and agreed before the snap general election was announced.”

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The 1-year fixed rate Guaranteed Growth Bonds offers 4.50 per cent gross/AER and the Guaranteed Income Bonds offers savers 4.41 per cent gross/4.50 per cent AER. The one year fixed Bond sits alongside the three-year Bond which went on sale in April this year.

There are two separate accounts on offer, with one giving the option to earn interest monthly, and the other yearly. Both accounts are fixed for one year, which means the rate is also fixed for a year. But you won’t have access to your cash within the one-year term until the Bond matures.

Start saving with £500 and save up to £1million in each bond. Earn interest annually with the Guaranteed Growth Bond. Earn interest monthly with the Guaranteed Income Bond. On both accounts, interest is paid into a nominated bank account, therefore interest is not compounded.

Sarah Coles, head of personal finance at Hargreaves Lansdown said: “The best rates on the market are available from smaller online banks and cash savings platforms, so they’re a sensible place to start when you’re looking for the best deal.”