NS&I hopes to attract more savers as it raises rates

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Government-backed National Savings & Investments (NS&I), which runs Premium Bonds and a variety of savings products, has unveiled a rise in the interest rates on some of its policies.

The news will be welcomed by savers who have been suffering amid the historically low interest rate environment.

NS&I said rates on its guaranteed growth bonds and guaranteed income bonds are going up by as much as 2.95% for new savers.

As a result, some of the fixed rate policies will now pay 4.6% a year before tax.

John Prout of NS&I said: “Customers can choose to invest between A?500 and A?1 million in our one, two, three or five-year bonds.”

Andrew Hagger of Moneynet.co.uk, the price comparison service, said savers will welcome the news and the one-year growth bond had “shot straight to the top of the one-year fixed-rate bond best buys”.

Mr Hagger adds: “With a maximum investment level of A?1 million and the added benefit of 100% security courtesy of the Treasury, regardless of balance, these products will be particularly appealing to those who have concerns regarding the standard A?50,000 compensation limit available from most other institutions.”

The financial crisis led to many British savers withdrawing their funds from banks and choosing safer havens, such as the NS&I and in the past financial year, 2008-09, the institute saw a huge influx of extra cash as a result.

During the period, it drew in A?26 billion – far exceeding the original target set for it by the Government.

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