National Savings & Investments has unleashed new issues of its one-year fixed Guaranteed Growth Bonds and Guaranteed Income Bonds to new and existing customers from today, paying a bumper rate.
The 6.2 per cent rate on the Guaranteed Growth Bonds makes them the highest offered across NS&I’s product range and the best buy for one year fixed-rate products.
This 1.2 percentage point hike brings the account close to matching inflation, which currently sits at 6.8 per cent. Previously, the bonds offered 5 per cent. Interest is paid on maturity.
The minimum investment is £500 and the maximum is £1million in each issue. After one year, savers will have the choice to withdraw their cash or reinvest.
King of the deals: NS&I’s new launches paying 6.2% offer the highest ever rate of any NS&I product
It has also boosted the rate on its Guaranteed Income Bonds to 6.03 per cent. This popular product pays out the interest monthly to a nominated account.
Elsewhere, the best one-year fix is currently 6 per cent, offered by a number of smaller providers. The top income bonds pay up to 5.82 per cent.
Rates are also being boosted for existing customers with two, three and five-year bonds when their current holding reaches maturity.
The rate has upped to 5.8 per cent for two and three year bonds and to 5.65 for five year bonds.
These are only available to existing customers with maturing products and are not open to new customers.
The new rates on these are competitive but do not top the table.
The best two year fixed rate bond is offered by Close Brothers Savings and pays a rate of 6.05 per cent, While Hodge Bank’s three year fixed rate deal pays 6 per cent.
The best five year fixed deal on the market is offered by Tandem Bank and pays 5.85 per cent.
Economic Secretary to the Treasury Andrew Griffith, says: ‘It’s vital that savers are able to benefit from recent interest rate rises, so I’m delighted that NS&I is releasing new Issues of Guaranteed Growth Bonds and Guaranteed Investment Bonds at over 6 per cent – the highest rate since they were launched.
‘For further peace of mind, the Treasury provides a 100 per cent guarantee on these savings.’
Dax Harkins, NS&I chief executive, says: ‘It was great to be able to bring back on sale our one-year fixed rate Guaranteed Growth Bonds and Guaranteed Income Bonds in February last year.
‘Today, we are able to offer new Issues with an improved interest rate for customers wanting the certainty of knowing how much they will be earning on their savings for one year.
‘At the same time, existing customers with maturing Bonds can choose to invest at new higher rates for two, three and five-year Guaranteed Growth Bonds and Guaranteed Income Bonds.’
Guaranteed Growth Bonds and Guaranteed Income Bonds are both taxable, unlike some NS&I products.
These means savers need to be alert to breaching their Personal Savings Allowance.
The PSA gives basic-rate taxpayers their first £1,000 of annual savings interest tax-free. Higher-rate taxpayers get £500 and additional-rate payers have no PSA.
Read more here: Will you be hit by a tax bill on your savings as rates rise?
