Martin Lewis’s Money Money Saving Expert (MSE) has urged Britons to check their NS&I savings rates now to avoid missing out on higher returns.
The HM Treasury-backed savings giant, National Savings and Investments (NS&I), has recently recently rolled out new versions of its British Savings Bonds with lower interest rates.
NS&I said the new deals reflect the “changing savings market” following the Bank of England’s Base Rate drop in August; however, savers may now find better interest rates with other providers.
The MSE team wrote: “NS&I has cut the rates it offers across all of its ‘British Savings Bonds’.
“Its two-year bond now pays 4.25 percent (down from 4.6 percent), its three-year bond now pays four percent (down from 4.35 percent) and its five-year bond now pays 3.9 percent (down from 4.1 percent).
“The top fixed-term account rates available elsewhere have also dropped slightly since last month – but you can still easily beat NS&I’s bonds.”
British Savings Bonds consist of two types: NS&I’s Guaranteed Growth Bonds and Guaranteed Income Bonds.
Both require a lump sum investment for a fixed period, but interest is applied differently—Guaranteed Growth Bonds add interest annually, while Guaranteed Income Bonds pay out monthly.
While fixed bond savings rates are largely on a downward trend according to Moneyfactscompare, Britons can snap similar accounts with a better deal.
Comparing NS&I’s two-year bond paying 4.25 percent, Ziraat Bank’s savings account, offered through Raisin UK pays an Annual Equivalent Rate (AER) of 4.72 percent.
Savers can start with a minimum deposit of £1,000 and up to £85,000 can be invested in total. Interest is paid on maturity.
For those with larger sums to invest, RCI Bank UK’s Two Year Fixed Term Savings Account offers an AER of 4.7 percent on deposits of up to £1million (like NS&I). Interest can be paid monthly or annually.
NS&I’s three-year bond now offers an interest rate of four percent, but it’s not the highest available. Oxbury Bank is offering an AER of 4.66 percent on deposits between £1,000 and £1million, with interest paid annually.
Meanwhile, NS&I’s five-year bond pays an AER of 3.9 percent, while Hodge Bank provides a higher AER of 4.37 percent annually or 4.28 percent monthly on deposits within the same range.
