NS&I Raises Premium Bonds Rates to 4.50% on One-Year Issue

NS&I has put new premium bonds issues on sale with higher fixed-term rates, led by a one-year British Savings Bond paying 4.50% AER. The Treasury-backed provider is offering the bonds to new customers and people whose existing bonds are due to mature.

The one-year rate was 4.07% before the change. NS&I also raised the two-year bond to 4.48% AER from 3.98%, the three-year bond to 4.45% AER from 4.02%, and the five-year bond to 4.40% AER from 4.05%.

NS&I British Savings Bonds

British Savings Bonds are fixed-term versions of NS&I’s Guaranteed Growth Bonds and Guaranteed Income Bonds. They do not allow early withdrawal, and savers must put in at least £500. The maximum investment is £1 million per person in each issue.

After the fixed term ends, savers can take their cash out or reinvest it into a new term. For people with large balances who want a set return from a Treasury-backed provider, the new rates set a clear point of comparison against other cash savings deals.

Rachel Springall on new rates

Rachel Springall said: “NS&I are popular because they are a trusted brand and provide 100% capital security, so these bonds may appeal to savers with big pots who are happy to forgo higher interest rates available elsewhere.”

She also said: “Savers who are enticed by the longer-term offerings from NS&I would be wise to shop around as there are many alternative bonds paying higher rates.” She pointed to “the market-leading five-year bond from Market Harborough Building Society paying 4.70%” and said “Skipton Building Society are paying a market-leading rate of 4.55% on a short-term fixed Isa, fixed for 18 months.”

NS&I Investment Account

NS&I has also increased the rate on its postal-only Investment Account to 2.05% AER from 1.00%. The higher savings rates arrive before the Bank of England’s next base rate decision on Thursday, giving savers a set of new fixed-rate options to compare against the rest of the market.