🔔 NS&I continues to lead the way, now on a wider range of savings products

Author: Anna Bowes
27th July 2020

It has been widely reported that National Savings & Investments (NS&I) is offering savers a beacon of hope by offering the best easy access accounts on the market.

Superman depicting NS&I being a hero

And now NS&I has announced an increase to its Net Financing target from £6bn to a massive £35bn, it gives us hope that these competitive rates will remain for the time being.

But, with best buy rates falling across the board, it’s not just NS&I easy access accounts that are paying market-leading rates. 

NS&I has become an unlikely hero for savers - although they are still struggling to provide effective customer service as demand has increased enormously.

Roll-over products only available to existing Guaranteed Growth, Guaranteed Income Bonds and tax-free Fixed Interest Certificates customers are also offering market-leading rates to savers.

These accounts are not available to new customers, but anyone who still hold current issues can roll them over into the current options at the end of their term.

Normally, clients will need to decide between the security and familiarity of the NS&I products or getting the best rates, as usually the NS&I accounts pay far lower rates than the rest of the savings market.

However, with best buy rates falling heavily since the double base rate cut in March, those who have maturing fixed rate products with NS&I can enjoy market-leading rates, as NS&I roll-over rates now beat or at least match the very best on the market.

For example, the best 12-month fixed rate bond currently available is with United Trust Bank and is paying 1.10% AER. The NS&I Guaranteed Growth Bond 1-year term Issue 66 is also offering 1.10% to those looking to roll over their maturing bond.

Over the longer term, NS&I is offering even more value. While the best 5-year bond currently available is paying 1.40% AER (United Bank UK), the NS&I Guaranteed Growth Bond 5-year term Issue 54 is paying 1.65% AER. On £50,000 that’s an extra £125 a year – so over £600 over the full term.

That said, Sharia provider QIB UK has launched a 1 year fixed term deposit account, via the Raisin UK platform, paying an Expected Profit Rate of 1.20% AER.*

The NS&I Guaranteed Income Bonds for the same terms, are paying 1.05% and 1.60% AER respectively for those who require regular monthly interest payments.

NS&I also offers Fixed Interest Certificates which are tax free savings accounts, so - like cash ISAs - the interest earned does not count as towards your Personal Savings Allowance (PSA) and no tax is paid on any of the interest.

Cash ISAs have really suffered this year, with best buy rates falling by up to 50%. Currently the best 2-year fixed rate ISA is paying 0.90%. In contrast, the current issue of NS&I’s Fixed Interest Certificate fixed for 2-years is paying 1.15%. There is also a 5-year option which is currently paying 1.60%, compared to the best 5-year fixed rate cash ISA on the wider market, which is paying 1.21%.

If you have one of these fixed rate products, and you are looking to roll them over, what do you need to do?

NS&I will contact to you around 30 days before maturity to let you know your options.

These will normally include:

·         renewing your Bond or Certificate for another term of the same length

·         renewing it for a term of a different length

·         cashing it in

To choose the first option, you don’t need to do anything – your Bond or Certificate will automatically renew for another term of the same length. With the other options, you need to let NS&I know your preference.

It’s not just easy access and fixed rate NS&I products that are leading the way. The government-backed provider is also paying market-leading rates on its variable rate (easy access) cash ISA and Junior ISA.

Quite simply - for the time being at least - NS&I is almost a one stop shop for best rates and long may it continue for savers.

For providers it is a challenging time, as they either need to seriously up their game with better rates or they simply cannot compete with NS&I’s unique 100% protection and market-leading rates.