National Savings & Investments (NS&I) has cut the rates on its three-year Guaranteed Growth Bonds from 4 per cent to 3.5 per cent, and its two-year offering has dropped from 4.1 per cent to 3.6 per cent.

NS&I bringing in 'ridiculous' Bonds change and customers plan to go 'elsewhere'

by · Birmingham Live

NS&I has today announced significant cuts to its British Savings Bonds rates. National Savings & Investments (NS&I) has cut the rates on its three-year Guaranteed Growth Bonds from 4 per cent to 3.5 per cent, and its two-year offering has dropped from 4.1 per cent to 3.6 per cent.

It has announced similar cuts to its Guaranteed Income Bonds, from 4.02 per cent to 3.54 per cent for two-year fixes, a drop of 12 per cent, and from 3.93 per cent to 3.44 per cent on the three-year product. From today, savers will be able to open two-year British Savings Bonds paying a rate of 3.6 per cent if they opt for interest paid annually or monthly.

NS&I has also launched a new three-year version of the bonds paying 3.5 per cent if interest is paid annually or 3.49 per cent if savers take the monthly income version. The rates are lower than those previously offered for the same fixed-rate terms, which paid 4.1 per cent for the two-year version and 4 per cent for the three-year version.

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NS&I said that the lower rates reflect 'changes in the wider market' and that the new rates will 'help NS&I to meet its net financing target'. Sarah Coles, head of personal finance at stockbroker Hargreaves Lansdown said the move is a sign 'NS&I may have filled its coffers.'

Ms Coles, of investment service Hargreaves Lansdown, said: “The savings boom has a sting in the tail for loyal NS&I savers. A solid period for savings culminated in a golden October, which saw us tucking money away in accounts at a faster rate than any other month on record outside the pandemic.

“NS&I has an obligation not to be too far ahead of its competitors, so cuts right across the savings market were always going to put it under pressure to reduce rates. However, the rates weren’t much to write home about in the first place.” James Blower, of The Savings Guru, said: “They’re just ridiculously off the pace and there’s significantly better value elsewhere."