šŸ”” 1.3 million NS&I customers see a boost to their savings

Author: Anna Bowes
22nd July 2022

Following the news last month that NS&I has increased the rate on the Premium Bond prize fund, this week the Government-backed savings institution has turned its attention to some of its other savers ā€“ but not all. Those NS&I customers that will benefit will likely be delighted with the large increases applied to some of their accounts. But there are others who should consider switching.

In summary, the following accounts were increased with affect from 21st July.

The easy access Income Bonds account ā€“ up from 0.50% to 1.20% AER.

The Direct Saver ā€“ another easy access account, which was also paying 0.50% has now seen an increase to 1.20% AER.

Children and ISA savers have also seen a boost.

The Junior ISA, which was paying 1.50% is now paying 2.20% and the Direct ISA has increased from 0.35% to 0.90%

These changes will be particularly celebrated by those with very large sums as you can place up to Ā£1m and Ā£2m respectively per person into the Income Bonds and Direct Saver accounts ā€“ and benefit from NS&Iā€™s unique protection as all sums placed with NS&I are protected by the Treasury.

However, those with the postal only Investment Account will be less celebratory, as they have not seen an increase at all since the rate was cut from 0.80% to 0.01% in November 2020. The rate on this account into which you can hold up to Ā£1m - remains at this dreadful level.

What about existing customers?

The accounts that are still available for anyone to purchase offer the same rate for both new and existing customers, but NS&I also has a range of Guaranteed Growth Bonds, Guaranteed Income Bonds and Fixed Interest Certificate accounts that are only available for those who already hold previous issues.  And as one of our readers pointed out recently, NS&I was offering some truly awful rollover rates on fixed rate bonds that were maturing.

So it is good news that new issues of Guaranteed Growth, Guaranteed Income Bonds and Fixed Interest Certificates will also offer significantly better rates, albeit not market leading ā€“ and only from 1st August 2022. That means that if you have a bond maturing before then, you will only be able to roll over into the current pitiful rates detailed below. The good news is that better rates can be found elsewhere ā€“ take a look at our Fixed Rate Bond and Sharia Fixed Term Accounts for up to date information.

Guaranteed Growth Bonds

1 Year ā€“ was 0.10% - new rate will be 1.85% AER

2 Year ā€“ was 0.15% - new rate will be 2.25% AER

3 Year ā€“ was 0.40% - new rate will be 2.55% AER

5 Year ā€“ was 0.55% - new rate will be 2.55% AER

Guaranteed Income Bonds

1 Year ā€“ was 0.06% - new rate will be 1.81% AER

2 Year ā€“ was 0.11% - new rate will be 2.22% AER

3 Year ā€“ was 0.36% - new rate will be 2.53% AER

5 Year ā€“ was 0.51% - new rate will be 2.53% AER

Fixed Interest Certificates are a little more complicated as they are tax free savings bonds, so may well still be valuable to retain for some people. But the new rates are still much lower than the amount that can be achieved via a cash ISA of the same term, especially if your Certificate matures before 1st August. That said, as these accounts are no longer on sale to new customers, you need to consider your options carefully before encashing, especially if you have already used your cash ISA allowance and if your bond matures after 1st August when the more competitive rates will apply.

Fixed Interest Certificates

2 Year ā€“ was 0.10% - new rate will be 2.15% AER

5 Year ā€“ was 0.50% - new rate will be 2.45% AER

The bottom line is that these rates are much better than they were which is likely to ensure NS&I retains much of the money currently deposited. However, better rates can be found elsewhere across the board, so those who have less than Ā£85,000 in particular, may wish to try and boost the interest they are earning further by moving their cash elsewhere