The nation’s favorite savings organization has significantly increased the interest rate on a popular account by 36%, aiming to provide better rates to environmentally conscious customers.
Now, savers can earn an industry-leading 5.7% on National Savings & Investments’ Green Savings Bonds over a three-year period, compared to the previous rate of 4.2%. These bonds were introduced in 2021 and contribute to funding eco-friendly projects as part of the Government’s Green Financing Framework.
The minimum amount required to open an account is £100, and savers can purchase up to £100,000 worth of bonds in each release. However, there is a cooling-off period of 30 days before the funds are locked away.
Dax Harkins, the CEO of NS&I, expressed his satisfaction with the higher rate offered on the Green Savings Bonds. He stated, “This is an excellent opportunity for savers who want a guaranteed return while also making a difference with their savings by contributing to a greener, cleaner, and more sustainable world.”
Although the guaranteed rate is competitive among three-year fixed-rate bonds, National Savings & Investments is not the absolute best option for a three-year investment. Recognise Bank currently offers the highest interest rate of 6.05% for three-year bonds. Furthermore, savers who choose to fix their funds for two years with Recognise Bank can earn 6.1%.
Providers are exercising caution with longer-term returns, as four-year and five-year bonds provide interest rates ranging from 5.8% to 5.85%.
Laura Suter, an expert from AJ Bell, advises savers to consider that although the Bank Rate is not expected to increase significantly, fixed-rate options may still improve.
She added, “Locking away money for three years is a considerable commitment without the option of early withdrawal, so savers need to be certain that they won’t need access to their funds during that time.”
Anna Bowes from Savings Champion, a comparison site, reminds prospective customers that the earnings from the Green Savings Bonds may be subject to tax in the year the bond matures. Existing customers will not benefit from the increased interest rate, and their earnings will depend on the issue of the bond they initially invested in.
For savers needing earlier access to their funds, West Brom building society has introduced a 60-day notice account, offering an interest rate of 5.25% on deposits up to £1m.
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