NS&I launches new fixed savings bonds: How do the rates compare?

National Savings and Investments has launched a range of savings bonds for those wanting to lock their money away for a better return. 

The Treasury-backed bank has launched new issues of its Guaranteed Growth Bonds and Guaranteed Income Bonds, collectively known as British Savings Bonds. 

Savers will now be able to open new one and five-year bonds, while NS&I has also boosted the rates it pays on its existing two and three-year bonds. 

The latter applies to both new customers, and existing customers with maturing bonds. 

It has been 15 years since one, two, three and five-year fixed rate savings accounts have been available with NS&I at the same time. 

What are the rates on British Savings Bonds? 

The new one-year British Savings Bonds will pay 4.05 per cent for both the growth and income options, while the five-year bonds will pay 4.06 per cent. 

The two and three-year versions of the bonds have now been boosted to 4 per cent and 4.1 per cent respectively. 

The new interest rate on the 5-year growth option is 4.06 per cent.

The move comes as NS&I was set a new, bigger fundraising target by the Chancellor in the Spring Statement. It has been tasked with raising £12billion, within a range of plus or minus £4billion for 2025-26.

Its fundraising target for the 2024-25 was £9billion with wiggle room of +/- £4billion by comparison, and NS&I announced it was on track to raise £10.5billion in its Q3 results. 

Sarah Coles, head of personal finance at Hargreaves Lansdown says: ‘The rates have been bumped up slightly in order to meet a marginally higher funding target.’ 

NS&I says the new issues of the fixed-rate bonds would ‘help NS&I to meet its new Net Financing target for 2025-26.’

How do NS&I rates compare? 

Although the rates have been increased, they still fall well short of the best-buy fixed rate savings deals. 

Savings experts, therefore, are not anticipating a rush of savers opening the new issues of the bonds. 

The top one-year fixed rate bond on the market pays 4.65 per cent and is offered by Cynergy Bank, compared to NS&I’s 4.05 per cent one-year bond. 

> Best fixed-rate savings accounts: Compare the top deals using our tables

Savers can also do better than NS&I’s two and three-year bonds by keeping their cash in one of the best two or three-year fixed-rate deals. These offer 4.58 per cent and 4.57 per cent respectively. 

The best five year fixed-rate account pays 4.58 per cent and is offered by Secure Trust Bank.

Andrew Hagger director of personal finance website MoneyComms, says: ‘I don’t see this move driving significant levels of new business.

What are the benefits of saving with NS&I? 

Savers can put between £500 and £1million into the fixed rate bonds. 

Unlike other savings accounts, all money is 100 per cent guaranteed by the government. 

This means savers don’t have to spread their money between a number of savings accounts in order to make sure it is all protected, in the event that the provider goes under. 

When using normal savings accounts with a bank, deposits are protected up to £85,000 per bank – so those with more money than that are advised to open multiple accounts with different institutions. 

Hagger says: ‘The people who may be interested in these products are those with very large amounts of cash, as there’s no need to worry about FSCS safety limits and spreading their funds between multiple providers.’

While Coles says: ‘The rates […] remain nothing to write home about. For die hard NS&I devotees this brings some choice to a marginally improved range of fixed rate accounts. 

‘However, that’s just about all you can say in favour of these deals, because you can do far better elsewhere.’ 

NS&I is not able to offer the highest savings deals on the market to avoid skewing it. 

The Treasury-backed bank said the new bond offerings ‘balance the interests of savers, taxpayers and the broader financial services sector.’