Increase in Interest Rates by NS&I on Two Savings Accounts - A Comparative Analysis
The National Savings and Investments (NS&I) has announced an increase in the interest rates for new issues of its 1-year-fixed-term Guaranteed Growth Bonds and Guaranteed Income Bonds. The new interest rate for the Guaranteed Growth Bonds stands at 4.18% AER, while the Guaranteed Income Bonds offer a higher gross rate but the same AER as the previous rate of 4.05%.
This interest rate boost comes as good news for savers after NS&I cut rates on longer-dated bonds earlier in July. However, the new rates from NS&I still trail behind the best fixed-term savings accounts available on the market. For instance, AlRayan Bank offers a one-year fixed rate as high as 4.6%, and Conister Bank pays 4.53% for the same term.
In comparison, for longer terms such as two-year fixed bonds, NS&I offers around 3.85% AER. This rate lags behind market leaders like Castle Community Bank, which pays 4.38% on two-year bonds.
While NS&I bonds provide the security of being government-backed and have lower minimum deposits (£500), their interest rates are generally slightly below the very best fixed-term savings accounts currently available. These often require larger minimum deposits, such as £10,000 for AlRayan Bank’s best one-year rate. Nevertheless, NS&I can still appeal to savers who prioritize safety and accessibility over maximizing return.
It is important to note that the interest on AlRayan Bank's one-year fixed term savings account is paid on maturity, while the interest on Castle Community Bank's two-year fixed rate bond is paid annually.
The new NS&I bonds can be bought from July 24, 2025, and are available to new customers and those with existing NS&I one-year bonds that mature soon. For those seeking the highest interest rates, it is recommended to compare the best savings accounts, as detailed in a separate article.
The new interest rate boost by NS&I is part of its efforts to work towards its annual Net Financing target, while continuing to balance the interests of its savers, taxpayers, and the broader financial services sector.
[1] NS&I website: www.nsandi.com [2] AlRayan Bank website: www.alrayanbank.co.uk [3] Conister Bank website: www.conister.co.uk [4] Chase Bank website: www.chase.com [5] Castle Community Bank website: www.castlecommunitybank.co.uk
- The increase in the interest rates for the 1-year-fixed-term Guaranteed Growth Bonds and Guaranteed Income Bonds from NS&I might encourage more individuals to consider personal-finance strategies that include bonds for their savings.
- In the realm of personal-finance, NS&I's new interest rates for their bonds come after they cut rates on longer-dated bonds earlier in July. However, these rates still fall behind the top fixed-term savings accounts on the market, such as those offered by AlRayan Bank and Castle Community Bank.
- For those prioritizing business-strategies involving savings and investments, it could be beneficial to compare different options, including banks like NS&I, AlRayan Bank, Conister Bank, and others, to ensure the highest interest rates are being leveraged for their financial goals.
