NS&I slashes interest rates across 8 savings accounts in blow to customers

National Savings and Investments (NS&I) has launched eight new issues of British Savings Bonds today, offering lower interest rates, a blow to customers.

British Savings Bonds are fixed-term issues of NS&I’s Guaranteed Growth Bonds and Guaranteed Income Bonds. They are available to new customers and those with existing Bonds which are due to mature. The savings institution says the changes today (Tuesday, January 6) “reflect changes in the wider market”, helping it to meet its Net Financing target while continuing to balance the interests of savers, taxpayers and the broader financial services sector.

New NS&I British Savings Bonds interest rates

The new interest rate on the 1-year Growth option is 4.07% gross/AER, and the Income option is 4.00% gross/4.07% AER, down from 4.20% gross/AER and 4.13% gross/4.20% AER, respectively.

The new interest rate on the 2-year Growth option is 3.98% gross/AER, and the Income option is 3.91% gross/3.98% AER, down from 4.10% gross/AER and 4.03% gross/4.10% AER, respectively.

The new interest rate on the 3-year Growth option is 4.02% gross/AER, and the Income option is 3.95% gross/4.02% AER, down from 4.16% gross/AER and 4.09% gross/4.16% AER, respectively.

The new interest rate on the 5-year Growth option is 4.05% gross/AER, and the Income option is 3.98% gross/4.05% AER, down from 4.15% gross/AER and 4.08% gross/4.15% AER, respectively.

Existing customers with these accounts who have already received their 30-day maturity letter will receive the interest rate quoted in the letter.

British Savings Bonds (Guaranteed Growth Bonds and Guaranteed Income Bonds) are available to customers wanting a guaranteed rate for a fixed term of one, two, three or five years.

Guaranteed Growth Bonds are a lump sum investment that earns a fixed rate of interest over a set period of time (called ‘investment term’). Guaranteed Growth Bonds are designed to be held for the full term. Interest is calculated daily and is added to the Bond on each anniversary of the investment.

Guaranteed Income Bonds are a lump sum investment that pays out monthly income at a fixed rate of interest over a set period of time (called ‘investment term’). Interest is calculated daily and is paid into the customer’s nominated bank account.

Funds cannot be withdrawn early with fixed-term accounts. Savers need a minimum investment of £500 and can invest a maximum of £1million per person in each Issue. After the fixed-term period, savers will have the choice to withdraw their cash or reinvest it into a new term.