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NS&I tempts savers with four new fixed-rate bonds

The government-backed savings organisation is offering savers interest of up to 2.2% for locking their money in for three years.

NS&I tempts savers with four new fixed-rate bonds

NS&I has reintroduced four fixed-term bonds after an eight-year hiatus, giving savers the opportunity to earn interest of up to 2.2%.

The government-backed savings organisation is offering one-year and three-year guaranteed growth bonds and guaranteed income bonds, which have not been on sale since 2009.

Savers must subscribe online through the NS& I website and require a minimum investment of £500.

The one-year guaranteed growth bond will pay interest of 1.5% and the three-year will pay 2.2%. Those saving into the one-year guaranteed income bond will earn 1.45% and those in the three-year will earn 2.15%.

All the bonds are designed to be held for the full term and a penalty of 90 days’ interest will be applied if the bonds are cashed out before the term ends.

Ian Ackerley, chief executive of NS&I, said savers could already invest up to £3,000 in the three-year investment guaranteed growth bond, which pays 2.2%, and the new issues will allow them to save up to £1 million more.

‘These issues of guaranteed growth bonds and guaranteed income bonds will also help those who want a one-year investment or who want to invest additional savings for three years,’ he said.

‘As well as being able to invest up to £1 million per person, per issue in our one or three-year bonds, savers will also benefit from NS&I’s 100% Treasury guarantee.’

Sarah Coles, personal finance analyst at Hargreaves Lansdown said the new bonds were part of an ‘ambitious target’ to raise between £10 billion and £16 billion.

‘The last time it had such a bold target we saw the launch of the so-called Pensioner Bond, paying 4% over five years, which saw £2.3 billion invested in its first three days,’ she said.

‘These bonds are not quite so generous, but they are competitive. At the time of writing, the three-year guaranteed growth bond looks particularly strong, offering the second highest interest rate for a minimum investment of £500 over this term – and matching its current three-year offering, which is on sale until April 2018.’

When compared with what is currently on offer in the market, the one-year guaranteed growth bond is among the top five most generous rates for those investing £500.

‘With a minimum investment of £500 and maximum of £1 million – guaranteed by the government – it will be particularly attractive to investors with significant savings,’ said Coles.

‘Their savings would otherwise need to sit in numerous accounts, with gradually less rewarding interest rates, in order to be protected under the £85,000 limit of the Financial Services Compensation Scheme. These bonds offer 100% protection for up to £1 million.’


3 comments so far. Why not have your say?


Dec 05, 2017 at 14:41

These are taxable btw.

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Dec 06, 2017 at 10:17

Taxed above your interest allowance.

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Stephen B.

Dec 06, 2017 at 21:12

So the one year bond will almost certainly lose you money in real terms and the three-year one may well do. I think I'll pass ...

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