NS&I withdraws popular Guaranteed Income and Growth Bonds from sale

Author: Anna Bowes
02nd September 2019

NS&I has today announced that it has withdrawn its popular Guaranteed Income and Growth Bonds from sale – and has cut the rates on new issues that will be available to existing customers with bonds that are coming up for maturity – by 0.25%.

National Savings & Investments

This move comes just over a year after NS&I cut the maximum deposit amount on these bonds, from £1m to just £10,000 per person, per issue. This was a far bigger blow to savers looking to deposit larger amounts of cash. NS&I’s unique HM Treasury protection means that ALL savings deposited are protected, unlike under the Financial Services Compensation Scheme where it’s up to £85,000 per person, per banking licence.

NS&I has today also announced new issues of the off-sale Fixed Interest Savings Certificates, which are also paying 0.25% less than the previous issues.

According to NS&I, the reason for the changes to the fixed term products are as a consequence of a number of factors, most notably, “the measure that NS&I uses for raising cost-effective finance for the Government is lower than target, due to exceptionally low gilt yields”.

What this actually means is that the state can raise the capital it needs more easily (and presumably more cheaply) by issuing Government bonds, which are currently very popular.

It’s not unprecedented for NS&I to withdraw popular products when they no longer need to raise funds and Guaranteed Income and Guaranteed Growth Bonds had been absent themselves from the market for new customers for several years before being reintroduced 2017.

Whilst this current move will be disappointing to some NS&I fans, the good news is that considerably better rates can be found with other providers.

For example, over one year, the best guaranteed income bond available is from Wyelands Bank – paying 1.86% gross/1.88% AER, compared to the new NS&I account paying 1.20% gross/1.21% AER.

And the best paying one-year guaranteed growth bond alternative is with The Access Bank, paying 1.90% gross/AER - compared to 1.25% gross/AER for the NS&I Guaranteed Growth Bond.

For those happy to choose a Sharia account, even better rates can be found. The best one year account from BLME is currently paying 2.10% gross/AER – bet there is no monthly income option.

Take a look at our Fixed Rate Bond, Monthly Income and Sharia Fixed Term best buy tables, for more information.

What do you need to know if you are an existing customer?

Customers with Guaranteed Growth Bonds, Guaranteed Income Bonds or Fixed Interest Savings Certificate maturing on or before 5 October 2019 and who automatically renew into a new Issue of the same term, will receive the previous, higher interest rate - but remember that at just 0.25% more than the new rates, better can still be found by switching to other providers.  

However, any customers who choose to renew into a new Issue but a term of a different length will receive the reduced rates which were effective from 2 September 2019.

For a review of more of the changes that NS&I has made over the last year or so, read Anna Bowes' article published in the Daily Mail.

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