Long awaited NS&I bond is finally here

13th April 2017

It's finally here. After months of waiting, the new National Savings & Investments (NS&I) Investment Guaranteed Growth Bond is on sale now. A government initiative to help support savers who have suffered from low interest rates, the bond, announced in the Autumn Statement last year, offers a rate of 2.20% AER fixed for three years. You can download our free factsheet for the full details or feel free to give us a call to chat through the account conditions with one of our savings experts.

Whilst the bond does offer a market-leading rate of interest, it is restricted to a maximum balance of £3,000 per person and you can only apply online, which will clearly disappoint those savers who are unable or uncomfortable to deposit funds this way. Sadly for those savers, the state owned savings bank that once offered its accounts via the Post Office network, is not alone and it seems to be a sign of the times, as over 25% of live (available to open) fixed rate bonds are online only. In fact the majority of the very best fixed rate bonds are online only.

However, this doesn’t mean that non-online savers should simply settle for less and certainly shouldn’t leave money languishing with their high street bank, for example, paying paltry rates of interest in many cases. There are plenty of more competitive rates out there for those who’d prefer to use the post or the telephone, even if they are not the very best rates. Shopping around is essential.

Another key point is the increasing threat of rising inflation. Although, perhaps surprisingly, the CPI rate of inflation remained unchanged for March 2017 at 2.3%, it's predicted to rise further which eats into savers' valuable interest, in real terms. That said, the difference can be stark between leaving your money languishing in a poor-paying account, in some cases as low as 0.01% versus moving your money to some of the best paying accounts, such at the new NS&I bond. So don't let the spectre of rising inflation put you off. It's important to make as much money as possible, while we eagerly await a rise in interest rates. 

Talking of an interest rate rise. 2017 marks 10 years since the Bank of England increased interest rates and with rising inflation a threat, some economists are suggesting that this year will be the year we see our first rise since then. When the Bank of England does eventually decide to dip its toes in the water and begin to increase interest rates to what is deemed 'normal levels', it is still expected that any rise will be slow and steady. But it certainly can't come soon enough for savers! 

And finally, for those savers looking to take advantage of the new Lifetime ISA, another government initiative to support savers, you may be sorely disappointed that as of yet, no bank or building society is offering a cash version. You can still only open a stocks and shares option. When and if providers get on board with a cash option, we'll keep you well informed.

Anna Bowes, Co-Founder and Director of Savings Champion 

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