National Savings & Investments (NS&I) has bumped up the interest rate on its Green Savings Bond - up from 3% to 4.2%. The bond is available on a three year fixed term.
The increase follows the government-backed bank’s relaunch of its one-year fixed bonds, as it attempts to bring in more savers and compete with the wider savings markets.
Recently, NS&I also bumped up the interest rate on its Premium Bonds, resulting in more premium bond prizes.
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Savers have benefitted from better rates on savings accounts over the last few months as the Bank of England’s interest rate rises prompt providers to up their rates.
The green bonds were launched to help finance the green projects.“Customers can save while helping to make the world greener, cleaner and more sustainable,” Ian Ackerley, NS&I chief executive, said.
“The projects include making transport greener, using renewable energy over fossil fuels, preventing pollution, using energy more efficiently, protecting natural resources and adapting to a changing climate.”
Is NS&I’s Green Savings Bond right for me?
To benefit from the 4.2% rate, you will have to be willing to lock your money away for three years.
Fixed-term savings accounts tend to offer better rates than easy-access savings accounts or regular savings accounts, but they won’t be suitable if you need to access your money quickly.
However, if you have more than £85,000 in short-term savings, then NS&I certainly offers better protection as the money is safe with the Treasury backing. Regular banks only offer protection for up to £85,000 of your cash via the Financial Services Compensation Scheme, should a bank go bust.
The best one-year fixed savings accounts offer rates of up to 4.18%, so they might be a better option if you don’t want to part with your money long-term, especially given the rising cost of living.
The rate is competitive among other three year fixed-rate products on the market. The best three-year fixed rate cash Isa offers a rate of 4.11%, while Secure Trust Bank offers a rate of 4.4% on its three-year fixed rate bond.
NS&I first issued its Green Savings Bonds October 2021. As of March 2022, it had achieved sales of around £288m.
How much can you save in NS&I Green Savings Bonds?
The minimum investment is £100, with a maximum investment of £100,000.
There is a 30-day cooling off period if you change your mind, but after that you won’t be able to access your money until maturity.
Interest is calculated daily and added yearly on the investment’s anniversary date, but paid at the end of term.
You can purchase the bond online at nsandi.
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