New Savings Bonds Offering 4% Interest Rate by NS&I Now Available
The National Savings and Investment (NS&I) has boosted the interest rates on its British Savings Bonds, following the launch of new issues. The products now offer returns ranging from 4% to 4.1% across four term lengths, with all four options now available for purchase. This marks the first time in 15 years that all four term lengths have been accessible simultaneously.
In December 2024, NS&I reduced the interest rates on these products, making the latest hike a welcoming development for savers who favor NS&I's offerings.
There are two types of British Savings Bonds - Guaranteed Growth Bonds and Guaranteed Income Bonds. To participate, savers must deposit a minimum of £500, with a maximum of £1 million per person per issue.
Guaranteed Growth Bonds represent a lump-sum investment that accrues a fixed interest rate over the chosen term length. These bonds are intended to be held for the entire term, with interest calculated daily and added to the bond annually.
On the other hand, Guaranteed Income Bonds are designed to pay out a monthly interest rate to the bondholder's bank account over the selected term length.
Andrew Westhead, NS&I retail director, expressed his satisfaction that one-year and five-year British Savings Bonds were being reintroduced. He mentioned that in the current market, savers searching for guaranteed rates have more choices, with the confidence that their savings are fully protected.
"Today's changes will help us in achieving our new Net Financing target, while maintaining a balance between the interests of savers, taxpayers, and the broader financial services sector," Westhead added.
The one-year and five-year Guaranteed Growth and Income Bonds now offer an interest rate of 4.05% and 4.06%, respectively (up from 3.95% and 3.4% for growth bonds, and 3.39% for income bonds). Two-year growth and income bonds, however, have slightly lower rates of 4% (up from 3.6%).
Three-year growth and income bonds boast the highest interest rate within NS&I's range, with an AER of 4.1%.
Whilst these increased interest rates represent a positive change, savers may find higher returns with alternative options; for the latest comparisons, consult our "best savings rates" guide.
Analysts have cautioned that the rates offered by NS&I may not be as competitive compared to market leaders. For instance, the current top one-year fixed rate account stands at around 4.65%, resulting in £150 of lost interest over the year for someone saving £25,000, Laura Suter, director of personal finance at AJ Bell, explained.
NS&I's British Savings Bonds enable customers to grow their cash savings while aiding the government in raising funds for UK investments. Being an arm of the UK government, NS&I offers greater security compared to most other financial services firms, as all savings are fully backed by HM Treasury, exceeding the protection offered by the Financial Services Compensation Scheme (FSCS).
Unlike British Savings Bonds, Premium Bonds - another popular offering from NS&I - do not provide a specified interest rate. Instead, Premium Bonds holdings are entered into a monthly prize draw, offering savers the chance to win between £25 and £1 million.
In the April 2025 Premium Bonds prize draw, more than 5.9 million prizes worth over £412 million were awarded. British Savings Bonds, on the other hand, offer guaranteed monthly interest rates.
As all NS&I products are fully backed by the UK government, savings kept with NS&I are secure for as long as the government is in existence.
- The National Savings and Investment (NS&I) has increased the interest rates on its Guaranteed Growth and Income Bonds, offering returns of up to 4.1% across various term lengths.
- Andrew Westhead, retail director of NS&I, stated that the reintroduction of one-year and five-year Guaranteed Growth and Income Bonds provides savers with more choices in the current market.
- NS&I's British Savings Bonds, as an arm of the UK government, offer greater security compared to most other financial services firms, as all savings are fully backed by HM Treasury, exceeding the protection offered by the Financial Services Compensation Scheme (FSCS).
- While the increased interest rates on NS&I's British Savings Bonds represent a positive change, savers may find higher returns with alternative options; it is recommended to consult the "best savings rates" guide for the latest comparisons.