NS&I’s fixed bond customers could bag 5.15% saver – are you eligible?

NS&I is making noise again, and for good reason. If you currently hold savings in NS&I’s fixed bonds, you could be eligible for the provider’s 5.15% rate – the best-fixed savings rate on the market right now. 

The provider hadn’t been able to compete with its 6.2% one-year fixed bond from last summer for a while, leaving savers disappointed. In April, NS&I launched its three-year fixed British Savings Bonds, in the region of 4%. 

A month later, its 4.5% one-year fixed British Bonds entered the market, but only remained for two months (now withdrawn). But, since the Bank of England dropped the base rate to 5% in August, NS&I has tried to make a comeback – and its efforts might be paying off. 

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Just over a week ago, the state-backed lender launched more fixed bonds with new two-year and five-year fixed-term savers. Plus, it hiked the rate on its existing bonds. Now, it’s offering a 5.15% return to its existing savings customers. 

But, do you qualify for the rate and how do you get it? 

Are you eligible for NS&I’s 5.15% rate? 

The 5.15% ‘off sale’ savings rate is only available to existing NS&I customers who have been notified that their current Guaranteed Growth Bond is reaching its maturity date. 

NS&I said that customers will get a reminder 40 days before their bond matures. Then, savers will get a 30-day reminder, at which point customers can decide whether they want to enrol again and earn the 5.15% rate, or take their money out. 

You have the option of fixing again for one, two, three or five years – but the 5.15% rate is only applicable if you fix for one year. Existing customers who fix for a longer term will earn the following rates: 

• 2 year fixed - 4.6% AER
• 3 year fixed - 3.35% AER
• 5 year fixed - 4.1% AER

These three products are currently on sale. 

So, if you bagged NS&I’s 6.2% one-year bond last summer, you could be eligible as the product went on sale on 16 August 2023 and remained on the market for six weeks. So, these bonds should be maturing around now. According to NS&I, 225,000 people bagged the 6.2% saver.

How do NS&I’s bonds work? 

To earn 5.15%, you must opt for NS&I’s one-year fixed Guaranteed Growth Bond or Guaranteed Income Bond. The Growth Bond pays interest annually, and the Income Bond pays interest monthly. 

Just like your current NS&I bond, the rate is fixed for one-year and you can’t access your cash until the saver matures. 

With both accounts, interest is not compounded as it is paid into a separate nominated account. Here’s how much you would earn depending on how much you save: 

• If you save £20,000, you would earn £1,030 in interest
• If you save £50,000, you would earn £2,575.00 in interest 

But, don’t forget about your personal savings allowance. Your take-home money will differ, as you will get taxed on your savings income. For example, a basic rate taxpayer can earn up to £1,000 tax-free – any sum above this is taxed at the rate of 20%. Whereas a higher-rate taxpayer can earn up to £500 tax-free. After this, your savings is taxable at 40%. 

Here’s how much you would earn in interest depending on how much you save and how much tax you pay. 

There are some perks when saving with NS&I, compared to a usual savings account. You can save up to £1million and this is backed by the Treasury. In a normal savings account, only £85,000 is protected by the Financial Services Compensation Scheme (FSCS).  

How does the 5.15% rate compare to the rest of the market?

NS&I’s 5.15% ‘off sale’ rate is the best-fixed savings return currently on the market, and the only one-year fixed bond above the current 5% base rate. Since interest rates dropped, MoneyWeek has seen most savings products go south of 5%. 

These are the top one-year fixed savers on the market right now:  

• Ford Money - 5% AER
• Habib Bank Zurich - 5% AER
• Close Brothers – 5% AER

On 12 August, Secure Trust Bank was returning 5.05% AER and SmartSave was offering 5.02% on their one-year bonds. Today (16 August), Secure Trust Bank has pulled its product from the market and the SmartSave saver now returns 4.93% AER. 

So, this NS&I-exclusive 5.15% rate is highly competitive. As a result, it will be no surprise that the product will be in demand, so you should snap it up as soon as you qualify, as NS&I could change the rate at anytime, it has confirmed.