NS&I interest rates hit highest levels in a decade

The savings bank has increased the interest rates on its products to their highest levels in years.

More than 2.7 million people will see their savings boosted after NS&I interest rates jumped to their highest levels in years, more than a decade in some cases. 

The savings provider has lifted the rate paid on its Direct Saver and Income Bonds from 1.20% to 1.80%, the highest in over a decade. The rate on its Direct ISA is now 1.75%, up from 0.90% previously. That’s its highest level since 2014. The changes to the products are effective from today(25 October 2022). 

“Some of the rates we’re now paying – including on Premium Bonds – are the highest that they have been in over a decade, which is great news for savers,” said NS&I chief executive Ian Ackerley. “The changes to interest rates we’ve announced today will help ensure that our products are priced appropriately when compared to those offered by our competitors.”

NS&I interest rates rise on all of the providers products 

NS&I interest rates on its Junior Isa and its Investment Account have also increased. The Junior Isa rate has gone from 2.20% to 2.70%, while anyone with an Investment Account will enjoy a boost from 0.01% to 0.40%. 

This is the second time NS&I has boosted its ratings over the last month. In late September the savings bank announced it was increasing its Premium Bonds prize fund rate from 1.40% to 2.20%, changing the odds of winning from 24,500 to one to 24,000 to one. 

NS&I has also increased the rates on its fixed-term savings products from 1 December, though these are not yet on sale. Its one-year Guaranteed Growth Bonds will see the biggest rate increase, from 1.85% to 3.60%. 

What is NS&I and what does it offer?

NS&I (National Savings and Investments) is a government-owned bank backed by the Treasury, which means any money you have stored with them is 100% secure. There’s no limit on the amount you’d get back if the NS&I collapsed, which is particularly appealing to those with more money to put away as not all savings institutions will protect and return 100% of your cash should things go wrong. 

The savings bank is well known for its Premium Bonds, which offer savers the chance to win between £25 and £1m tax-free every month. Investors get a unique bond number per pound they invest, meaning the higher your investment the better your odds of winning. You have to hold the bonds for a calendar month to be able to be entered into the prize draw and you don’t gain interest on your savings. 

You can also purchase Green Savings Bonds, which have a 3% interest rate fixed for three years. You cannot take your cash out until the Bond reaches the end of its term and interest will be taxable once you do. You can invest as little as £100 and up to £100,000. 

If you open a Direct Saver account you can take money out without notice or penalty, and you will pay tax on your gross interest. You can pay in anywhere between £1 and £2m per person and manage the account online or by phone. 

The maximum amount you can pay into NS&I’s Direct ISA is £20,000, and you can start with as little as £1. The account is totally tax-free and you can take money out at any time without fees.

You can open a Junior ISA with £1 and save as much as £9,000. You can’t take the money out until the child turns 18, and the account is tax-free. 

NS&I’s Income Bonds pay out interest every month and offer easy access to your money – you can take it out at any time with no fees. You will pay tax on your gross interest and need £500 to open one. The most you can invest is £1m. 

With 25 million customers, NS&I is one of the largest savings organisations in the UK, however, this doesn’t mean it offers the best returns

Right now you can earn as much as 5% on an easy access account for up to £1,500, a far better deal than NS&I’s best offer. You can look at our guide to the best savings accounts to see how they compare. 

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