NS&I hits savers as it pulls fan-favourite bond
The option for five-year bonds has been eliminated, and interest rates for two- and three-year bonds have been significantly reduced.
NS&I has dealt another setback to savers by altering its bond products, just after last week's news that it will reduce the interest rate for Premium Bonds starting in January 2025.
NS&I has removed its five-year bonds from the list of available products and has also lowered the interest rates on the newly launched two- and three-year bonds.
The two-year Guaranteed Growth Bonds and Guaranteed Income Bonds will now yield an interest rate of 3.6 percent, down from their previous rates of 4.1 percent and 4.09 percent, respectively. On the other hand, the three-year Guaranteed Growth Bonds now offer a 3.5 percent return, a decrease from the earlier 4 percent. Additionally, the Annual Equivalent Rate (AER) for the three-year Guaranteed Income Bonds has also fallen, moving from 4 percent to 3.49 percent.
"NS&I needs to stay competitive, so the overall decrease in savings rates had to push them to lower theirs as well. That said, their rates weren’t particularly attractive to begin with," said Sarah Coles, the personal finance leader at Hargreaves Lansdown.
"This probably indicates that the organization believes it is in a strong position with its fundraising efforts, allowing it to make its products less appealing since it doesn't need to focus on bringing in more money," Coles noted.
She encouraged individuals saving money to explore various options to find the most favorable rates. “Right now, you can find easy access savings accounts offering over 5 percent, and for fixed terms, rates can go up to 4.8 percent for one year and 4.6 percent for terms of two, three, or five years. Don’t feel like you have to accept low rates from any provider, including NS&I,” Coles emphasized.
