NS&I has raised the rates on its fixed-rate bonds – but how do they compare with the rest of the market?
National Savings and Investments (NS&I) is the government’s savings arm, backed by The Treasury, and putting your money away into an account with it is one of the safest things you can do.
It’s recently upped its savings rates on some fixed-rate bonds, and they are now paying a competitive rate of interest.
These accounts are usually very popular with savers, because of the security of them, yet they aren’t market leading. Here’s what you need to know if you’re considering saving or investing with NS&I.
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Who is NS&I?
NS&I is owned by the UK government and 100% of savings held with it are guaranteed. It’s backed by HM Treasury so it’s more or less the most secure place you could put your money.
It started in 1861 as the Post Office Savings Bank, set up to make sure everyone – no matter their income – had the chance to put their money into a savings account.
In comparison to other banks and savings providers, all of your money is safe while usually only up to £120,000 is guaranteed if a licenced bank was to go bust.
Any money saved or invested with NS&I is used by the UK government. In return for lending money to it, you’ll be paid interest or if you choose Premium Bonds, you’ll have the chance of winning cash prizes each month.
What savings accounts does NS&I offer?
NS&I offers a range of savings accounts, including fixed-rate income bonds and easy-access savings accounts.
Its fixed-rate savings bonds have a set rate of interest and you can’t access your money until the term of the account ends. You can put in between £500 and £1million and you choose when you get the interest paid. With its guaranteed income bonds interest is paid monthly, but with its guaranteed growth bonds interest is paid annually into the bond.
It also offers Premium Bonds, which pay no interest but you are entered into a lottery each month to win potential cash prizes. You can buy a Premium Bond with a minimum of £25 and each month two people are chosen to win a £1million jackpot. There are also smaller prizes, ranging from £25 to £100,000, available. The current interest rate for Premium Bonds is 3.30% variable.
There are also tax-free accounts available, including a direct ISA paying a variable rate of 3.50% AER and a Junior ISA paying a variable rate of 3.55% AER.
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What is the current NS&I interest rate?
Rates have recently been improved across a number of NS&I fixed-rate savings accounts. But although NS&I is backed by the government, that doesn’t always mean it will have the best interest rates. In most areas there are other providers offering a higher rate.
Here we look at how they compare when looking at rates alone, although there are other aspects to consider such as the minimum deposit needed (£500 with NS&I’s fixed-rate-accounts), how you can access the money, and how you manage the account. The rate for the savings bonds is fixed for the period of having one but for the ISAs the rate is variable so could change.
How NS&I compares to market-leading rates
| NS&I accounts | The market-leading accounts |
| NS&I one-year bond: 4.5% AER | AlRayan Bank (via Meteor): 4.70% AER |
| NS&I two-year bond: 4.48% AER | Kent Reliance: 4.69% AER |
| NS&I three-year bond: 4.45% AER | Kent Reliance: 4.66% AER |
| NS&I five-year bond: 4.40% AER | GB Bank: 4.70% |
| NS&I easy-access direct saver: 3.05% AER | LemFi: 5.00% AER |
| NS&I easy-access direct ISA: 3.50% AER | Trading 212: 4.51% AER |
| NS&I Junior ISA: 3.55% AER | Beverley BS: 3.85% AER |
If you’re looking for a new savings account, we have a full list of the best fixed-rate accounts, cash ISAs, and easy-access savings accounts.
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How safe is my money with NS&I?
Money held with NS&I is very secure and all of the cash you put in is guaranteed to be safe. It’s the only savings provider backed by the HM Treasury and its largest stakeholder is the UK taxpayer.
Should I open an account with NS&I?
If you’re looking for a new savings account, the rate of interest it pays should usually be the main priority. Choosing an account with the highest rate means you will get the most amount of money possible for your savings.
However, it’s not the only thing to consider. The minimum and maximum amount you can put into the account, how you can open and operate it, and even who the provider is are all important too.
While NS&I has the benefit of being one of the safest places to store your savings, it doesn’t necessarily pay the highest rates of interest.
As you can see in our table all of the accounts are beaten by alternative providers. Yet when you look at the savings tables in a little more detail, some of the NS&I accounts do beat similar accounts from mainstream lenders. If we look at the two-year-fixed-rate accounts, for example, the NS&I account beats similar accounts from Halifax, Bank of Scotland and Leeds Building Society,
If the provider is important to you, you may want to go for a mainstream or well-known name like NS&I, but it’s worth remembering that even though a smaller provider is offering an account, it will need to follow the same banking rules and regulations and guarantee £120,000 per person (per institution), as set out in the Financial Services Compensation Scheme (FSCS).
