British Savings Bonds: NS&I reveals the rate it'll pay on the new accounts

During the Budget, the Chancellor declared that the British Savings Bonds would offer a 4.15% return for three-year terms. These bonds will be available for purchase for the next three years.

The blog post has been modified on the 3rd of April in the year 2024 at 11:18 BST.

Today, National Savings and Investments has announced the interest rate it will offer on its newly launched British Savings Bonds.

The recently unveiled bonds have been designed to yield 4.15% for a span of three years. The Chancellor initially disclosed these bonds during the Budget presentation, and they can now be procured via NS&I's website.

You can choose between two types of bonds - Guaranteed Growth Bonds with an interest rate of 4.15% for three years or Guaranteed Income Bonds with an interest rate of 4.07% for three years.

The second option enables individuals to receive the monthly interest payment. Both accounts are subject to taxation.

Today, NS&I has put forth a three-year fixed-rate bond named British Savings Bond, as was previously mentioned by the Chancellor during the Autumn Statement.

NS&I has launched three-year bonds that are similar to their one-year Guaranteed Growth and Income bonds. However, the one-year bonds had a much higher interest rate of 6.2% and were taken off the market in October.

NS&I has announced that they plan to make the sale of three-year bonds available over a long duration of time.

You have to put down at least £500 if you want to invest in the bonds, but you can invest up to £1million in each batch.

The online accounts cannot be accessed through phone or mail for investing.

On NS&I's website, it states that the investment is meant for online use. However, in the case that you are unable to invest online, please contact NS&I and they will provide you with alternative options.

Currently, the most excellent option for an annual fixed deposit offers a rate of 5.25 percent and is provided by Secure Trust Bank. If someone with £10,000 kept it in this account, they would have approximately £10,538 at the end of the agreed period.

The top-notch 36-month fixed deposit provides an attractive interest rate of 4.75% and is offered by Skipton Building Society. This account requires a commitment of 30 months. By putting £10,000 into this account, a depositor could potentially earn an estimated return of approximately £10,485 after one year.

Financial advisors believe that the interest rate provided by NS&I's bonds will not be appealing to the majority of savers. One advisor has even stated that the bonds are likely to be stuck in an unremarkable position with average returns.

What amount of profit could you gain within a span of 12 months?

The latest interest rate being offered for Guaranteed Growth & Income bonds is now at 4.15%.

NS&I previously offered a Guaranteed Growth & Income bond with a rate of 6.2%.

According to the head of personal finance at Hargreaves Lansdown, Sarah Coles, the recently released bonds are not doing well. The bonds are offering 4.07 per cent and 4.15 per cent over three years, which is far less compared to the market leaders. The disappointing rate of the bonds has caused concern, especially after the hype surrounding them during the Budget. Coles believes that if the bonds don't improve, they will likely be forgotten and ignored.

NS&I knew they needed to provide an exceptional offer to make savers enthusiastic about saving for three years.

The interest rates offered by NS&I lack the appeal required to motivate a large number of new savers to commit their funds for extended periods.

According to the founder of Money Comms website, Andrew Hagger, these savings accounts might attract individuals who have a higher amount of money saved.

He mentioned that people who save and have an amount exceeding £85,000, which is the protection limit of the Financial Services Compensation Scheme (FSCS), may find these bonds attractive. This is because they can deposit up to £1 million and it will be completely safeguarded by HM Treasury.

Individuals who have lesser amounts can presently avail a fixed-rate bond for three years, which provides a return of 4.65%, from Hampshire Trust Bank or Close Brothers Savings.

For a person who possesses a balance of £50,000, a 0.5 percent increase in the rate would mean an additional £250 every year, and a total of £750 throughout the three-year period.

If you are someone who saves with a pot worth £20,000, then it will cost you £100 per year and a total of £300 over three years. Therefore, it is advisable to explore alternative fixed rate choices.

The Economic Secretary to the Treasury, Bim Afolami, announced that savers can take advantage of the British Savings Bonds' three-year fixed-rate, safe in the knowledge that their savings are completely safeguarded by the Treasury. This presents a fresh chance for individuals to benefit from the scheme.

The use of Bonds would encourage people in the UK to save more money and also offer a budget-friendly way for the Government to borrow funds.

According to Dax Harkins, the head of NS&I, the purpose of British Savings Bonds is to aid individuals in saving for a lengthy period of time and encourage them to reach their savings targets. They can do this with the assurance that their investments are fully safeguarded.

Just like any other NS&I savings, the funds are invested towards assisting the UK through government funding.

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