NS&I boosts rates on eight savings accounts – are they best buys?

NS&I has hiked rates on eight of its fixed-rate savings accounts for the second time in two months.

The Treasury-backed bank has improved the rate on its one, two, three and five-year fixed rate accounts, with several now paying more than 5%.

It comes as NS&I strives to meet its net financing target of £15 billion for the 2026/27 tax year, up from £13 billion in 2025/26.

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Andrew Westhead, retail director at NS&I, said the move to increase interest rates comes in response to changes across the wider savings market.

What NS&I savings accounts have improved interest rates?

NS&I has raised rates on its British Savings Bonds, made up of Guaranteed Growth and Guaranteed Income Bonds, from today (6 October).

NS&I last increased rates on the accounts in August.

All eight of the accounts are fixed-rate, but the Guaranteed Growth Bonds pay out interest annually while the Guaranteed Income Bonds pay interest monthly.

The Guaranteed Growth and Guaranteed Income one-year bond rates have been increased to 4.99% gross/AER and 4.88% gross/4.99% AER, respectively.

The Guaranteed Growth and Guaranteed Income two-year bond rates have been hiked to 5.07% gross/AER and 4.96% gross/5.07% AER, respectively.

Rates on the Guaranteed Growth and Guaranteed Income three-year bonds are now 5.10% gross/AER and 4.99% gross/5.10% AER, respectively.

The Guaranteed Growth and Guaranteed Income five-year bond interest rates have been raised to 5.17% gross/AER and 5.06% gross/5.17% AER, respectively.

Source: NS&I

How do the British Savings Bonds compare to the rest of the market?

All eight of the British Savings Bonds were already competitive before these changes and they’ve now shot up the best buy tables.

The one-year bonds can be beaten only by thisbank’s one-year bond which is paying 5.10% at the time of writing, while the two-year deals are the fourth best on the market in terms of headline interest rate.

Meanwhile NS&I’s three and five-year bonds are among the top three for the highest interest rates for those types of account.

These rankings are based on an initial investment amount of £500 and comparing deals on data firm Moneyfacts’ website.

Rachel Springall, finance expert at data firm Moneyfacts, said NS&I’s latest interest rate rises are “likely to grab the attention of savers looking for a guaranteed return, particularly those who value the reassurance of having their money 100% backed by HM Treasury.”

Springall added: “The rate rises from NS&I reflect the wider uplift in savings rates and expectations surrounding future interest rate decisions.

“Competition in the savings market is good news for consumers, but attractive deals don’t always last for long, particularly if a provider attracts enough deposits and pulls a product from sale.”