National Savings and Investments has increased interest rates on its fixed-term British Savings Bonds, with returns now reaching up to 4.5%. The changes apply to both new and maturing customers, reflecting wider shifts in the savings market. The government-backed provider has also adjusted rates on selected other products, positioning its latest offers among the more competitive options currently available, though not the highest.
Higher Fixed Rates Introduced across Multiple Bond Terms
NS&I has launched new issues of its Guaranteed Growth Bonds and Guaranteed Income Bonds, offering revised rates across one-, two-, three- and five-year terms. According to official updates, the one-year option now pays 4.50% AER, up from 4.07%, while the two-year bond offers 4.48%, the three-year 4.45%, and the five-year 4.40%.
Income versions of these bonds provide slightly different gross rates but align closely in annual equivalent returns. For example, the one-year income bond pays 4.41% gross, equivalent to 4.50% AER. According to Which?, these products require a minimum investment of £500 and allow deposits up to £1 million per person, with funds locked in for the full term.
Early withdrawals are not permitted under any of the fixed-term options. At maturity, savers can either withdraw their funds or reinvest into a new bond. According to NS&I statements, the products are designed for customers seeking guaranteed returns over a defined period.
The provider has also increased the rate on its Investment Account from 1% to 2.05% AER, although this product remains less prominently marketed. At the same time, other accounts such as Premium Bonds have not seen equivalent increases.
Competitive Positioning but Higher Rates Remain Available Elsewhere
While the revised rates place NS&I among the top tier of “big name” providers, they do not lead the market. According to reports, one-year fixed-rate bonds elsewhere can reach around 4.7%, with similar figures available for longer terms from banks and building societies.
Even so, NS&I’s offering retains a distinct feature: full government backing. All deposits are secured by HM Treasury, meaning there is no upper protection limit. This contrasts with the Financial Services Compensation Scheme, which typically protects up to £85,000 or £120,000 depending on the context.
This guarantee continues to attract savers with larger balances. Rachel Springall of Moneyfacts, cited in coverage of the changes, noted that the bonds may appeal to those willing to accept slightly lower returns in exchange for complete security.
Market conditions appear to have influenced the timing of the rate increases. According to Which?, average fixed savings rates have risen modestly in recent months, with providers responding to a stable Bank of England base rate and broader economic uncertainty.
Despite the improvements, NS&I’s rates remain slightly below the highest available. Still, as noted in several reports, they now sit comfortably within the top 20 offers on the market, marking a shift from earlier in the year when its products were less competitive.
