NS&I turbo-charges savings – and some rates have doubled! 


National Savings and Investments has at last boosted the rates on a number of its easy-access and fixed-rate savings deals.

Its Direct Saver and Income Bonds now pay 1.8 per cent, up from 1.2 per cent, spelling better rates for around 600,000 savers. 

In December 2021, these paid just 0.15 per cent. Income Bonds are popular with pensioners as they pay out income each month.

Interest boost: NS&I’s Direct Saver and Income Bonds now pay 1.8%, up from 1.2%, spelling better rates for around 600,000 savers

Some 346,000 Direct Isa holders have also seen their rate move to 1.75 per cent, up from 0.9 per cent. All three of these rate changes come into effect immediately.

Anna Bowes, from Savings Champion, says: ‘The move means NS&I has finally become competitive on its easy‑access Direct Saver and Income Bonds.’

On Guaranteed Growth Bonds, it will boost its one-year fix from 1.85 per cent to 3.6 per cent, that’s 175 basis points, the largest of all its rises.

Its two-year, three-year and five-year deals will rise to 3.65 per cent, 3.7 per cent and 3.8 per cent respectively. Meanwhile, its Guaranteed Income Bonds will pay 3.5 per cent over one year, up from 1.8 per cent.

For the two, three and five-year versions, the rates will head to 3.55 per cent, 3.6 per cent and 3.7 per cent respectively. 

And lastly, its two-year Fixed Interest Savings Certificates will go to 3.4 per cent from 2.15 per cent, and its five-year version is up to 3.55 per cent.

All these new fixed-rate rises will take effect from December 1. However, none of these accounts is currently on sale to new customers. 

Savers who already have the bonds can renew them when they mature. Those who have accounts coming to the end of their term before December 1 will be offered the lower rate.

Around 22.5 million Premium Bond holders also received a healthy boost following a rise in the prize fund to 2.2 per cent this month.

The odds of winning have dropped sharply — from 35,500-1 at the start of this year to 24,000-1 now. Meanwhile, the number of £100,000 and £50,000 prizes that are up for grabs has nearly doubled.

The moves come off the back of the Bank of England base rate rising from 0.1 per cent in December 2021 to the current 2.25 per cent in September. The rate is expected to be raised still higher when Bank of England officials meet next week, and again in December.

Rises: Fixed Interest Savings Certificates will go to 3.4% from 2.15%, and its five-year version is up to 3.55%

Rises: Fixed Interest Savings Certificates will go to 3.4% from 2.15%, and its five-year version is up to 3.55%

However, there are now a number of easy-access savings accounts paying more than 2 per cent which beat NS&I. And, despite the improvements, rates held by millions at NS&I are still incredibly low. 

Roughly 1.5 million savers in NS&I’s Investment Account, run through the post, saw their rate boosted yesterday to a meagre 0.4 per cent from a dreadful 0.01 per cent.

Ms Bowes adds: ‘Its loyal Investment Account holders are still being very badly treated.’

Savers languishing in these accounts are being urged to move. The big attraction with NS&I is that all of your savings are guaranteed by the Government.

With banks and building societies, the most you can claim under the Financial Services Compensation Scheme if your provider runs into trouble is £85,000, or £170,000 on joint accounts.

NS&I aims to raise £6 billion (plus or minus £3 billion) in its current financial year, which runs from April 1, 2022 to March 31, 2023.

Bank of England figures show that NS&I had already hauled in £2.83 billion in its first five months — and that’s before this month’s rise in the Premium Bond prize fund from 1.4 per cent to 2.2 per cent, which may explain the slow move to raise easy-access and fixed rates.

sy.morris@dailymail.co.uk

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