The three-year bonds, which were first announced by Chancellor Jeremy Hunt in his Spring Budget last month, pay a rate of 4.15% AER – but MSE points out that you can ‘easily’ beat this rate
Martin Lewis’ MoneySavingExpert.com team has revealed whether new British Savings Bonds by NS&I are worth it.
The three-year bonds, which were first announced by Chancellor Jeremy Hunt in his Spring Budget last month, pay a rate of 4.15% AER – but MSE points out that you can “easily” beat this rate elsewhere. For example, the top easy-access account right now from the Post Office pays 5.06%, or you can get 5.21% for a six-month fix from SmartSave.
MSE goes further by saying “there’s nothing revolutionary” about British Savings Bonds. The MSE team added: “NS&I says your savings will be ‘invested back into supporting the UK’ – but, as NS&I itself points out, this is the case for ALL of its account types (including Premium Bonds). That’s because whenever you save with NS&I, you’re effectively lending your money to the Government – and the funds raised by the new bonds aren’t being ring-fenced for a specific use.”
You should also note that any money saved in the British Savings Bonds is locked away for three years. You can deposit between £500 and £1,000. Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “These NS&I rates just aren’t special enough to persuade swathes of new savers to tie their money up for longer.
“Easy access and short-term fixed accounts offer higher rates right now, because longer fixes factor in expectations that interest rates will fall during the term. However, at the moment, there are decent rates available on longer fixes that are worth considering.“
But she added: “There will be some interest in these bonds. The fact you can hold up to £1 million will appeal to those with huge savings balances, because this is 100% guaranteed by the Treasury, so savers can hold it all in one place without having to worry about the fact that the FCSC protections are limited to the first £85,000 with any institution.
“However, there are other options for this group, because they can use a savings platform to spread larger sums across different banks. They can stay within the FSCS limit and see everything in one place, while still securing great rates.”
