National Savings and Investments (NS&I) has increased the returns on some of its accounts, with many now paying over 5% for the first time in almost three years. This move comes amid growing competition in the savings market, which has led to some of the highest interest rates seen in years.
The updated rates apply to NS&I's "British savings bonds," which are rebadged versions of its guaranteed growth bonds and guaranteed income bonds. For growth bonds, the one-year product now offers 4.99%, up from 4.82%. The two-year rate has risen to 5.07% from 4.81%, the three-year rate to 5.1% from 4.83%, and the five-year rate to 5.17% from 4.85%.
These fixed-rate bonds are available for new customers and those with maturing accounts. While interest on growth bonds is added annually and paid at maturity, income bonds pay interest monthly. Investments in these bonds cannot be withdrawn before the fixed term ends.
Rachel Springall of Moneyfactscompare.co.uk noted that attractive deals in the current climate may not last long, as providers can withdraw products once they attract sufficient savings. Sarah Coles from AJ Bell stated that while NS&I rates are competitive, higher rates may still be found elsewhere, such as a 5.12% one-year fixed-rate bond from Union Bank of India (UK) or a 5.37% five-year fixed bond from GB Bank.
NS&I highlights that its bonds are backed by the Treasury, securing 100% of savings above the typical £120,000 bank guarantee limit. The minimum investment for these bonds is £500, with a maximum of £1m per person per bond issue. Separately, Starling Bank announced a 5% interest rate for new Easy Saver accounts opened on or after 1 October, applicable to balances up to £25,000, while Marcus by Goldman Sachs increased its one-year fixed-rate savings account to 4.75% this week.