NS&I hopes to attract more savers as it raises rates
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 £500 and £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 £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 £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 £26 billion – far exceeding the original target set for it by the Government.