NS&I cuts interest rates on 8 savings accounts – are they still worth it?

Savers have been dealt a new blow after National Savings and Investments (NS&I) cut rates on new issues of their popular fixed-term British Savings Bonds.

The state-owned savings bank today announced new issues of its one, two, three, and five year Guaranteed Growth and Guaranteed Income Bonds would go on sale with interest rates between 10 and 14 basis points lower than their previous issues.

The cuts only apply to new issues of the fixed-term bonds. Customers who put money into previous issues of NS&I’s British Savings Bonds will still receive the interest rate they initially agreed to.

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The move comes just two months after NS&I bolstered savings rates on its savings bonds in November.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The autumn and winter tend to see more fixed rate accounts mature, so there’s always a risk that savers will take their money and leave. That was definitely a theme in September, when money was flowing out of NS&I.

“There’s every chance that this temporary boost was designed to stem the flow. There was actually a significant rise in savings in November, when £2.45 billion was paid into NS&I, so now those higher fixed rates have done the job, cuts were in order.”

NS&I has not changed any of the details relating to their Premium Bonds products. The annual prize fund rate is still at 3.6% after being cut in August, and the chances of winning remain at one in 22,000 per £1 Bond.

Guaranteed Growth Bond interest rates slashed

Guaranteed Growth Bonds pay a fixed rate of interest over a set period of time with interest calculated daily and added to the bond on each anniversary of the investment. They operate like most traditional fixed-term savings accounts as interest earned is reinvested.

The rates on all new issues of these bonds have been slashed by between 10 and 14 basis points.

A table showing the old and new interest rates on NS&I’s Guaranteed Growth Bonds can be found below.

Source: NS&I, 6 January

Guaranteed Income Bond interest rates cut

NS&I’s Guaranteed Income Bonds operate differently to the growth bonds as interest is not reinvested but instead paid to the bond holder.

They are a lump sum investment that pays out monthly income at a fixed rate of interest over the agreed period of time. Interest is calculated daily and is paid into the customer’s nominated bank account.

A table showing the old and new interest rates on NS&I’s Guaranteed Income Bonds can be found below.

Source: NS&I, 6 January

How do British Savings Bonds compare to other fixed-term accounts?

Though savers looking for a fixed-term deal will be left disappointed by the news, there are still many other competitive options available in the fixed-term market.

The top one year fixed term savings account from Union Bank of India (UK) pays a rate of 4.45%, according to Moneyfacts, while an account with the same term from Chetwood Bank will pay 4.26% interest.

While better deals are available on the market, NS&I is still offering an interest rate that is above the average for one year fixed term accounts.

The Guaranteed Growth Bond pays 4.07% interest and the Guaranteed Income Bond pays 4% interest – these are 23 and 16 basis points above the 3.84% average in the wider market, respectively.

Coles at Hargreaves Lansdown said: “The good news is that [NS&I’s] bonds are still offering more than they did before the November bump. However, the bad news is that they fall short of the most competitive deals in the market. The fixed rate market has held up impressively in the face of the Bank of England rate cuts – in part because the market isn’t expecting many interest rate cuts in 2026.”

As for bonds with longer terms, savers can still find better deals than those offered by NS&I. The top two year fixed account pays 4.16% interest, the top three year pays 4.21%, and the top five year account pays 4.31%.

As NS&I is a savings bank run by the government, the money you hold in its products is effectively 100% safe as your savings are guaranteed by the government. The only way your money could be in jeopardy is for the UK government to go bankrupt, which is incredibly unlikely to happen.

We list the best savings rates right now in a separate piece.