Hit by NS&I’s cuts? This alternative pays 56pc more

Savers disappointed by the withdrawal of several National Savings & Investments fixedrate bonds and rate cuts on others can get as much as 56pc more if they shop around.

The state-backed institution has stopped selling its one-year and threeyear Guaranteed Growth Bonds and Guaranteed Income Bonds. There are 727,000 Growth Bond customers, with £16.9bn invested, while 49,000 people hold £3.4bn in Income Bonds.

Existing holders will be able to renew their bonds, but will see rates fall by 0.25 percentage points when they do. The cut also applies to Fixed Interest Savings Certificates.

Both varieties of guaranteed bond run for a fixed period. The only difference is that Income Bonds pay interest monthly, rather than at the end of the term. One-year Growth Bonds currently pay 1.25pc and the three-year option 1.7pc. For Income Bonds the rates are 1.2pc and 1.65pc respectively.

NS&I blamed low yields on government bonds (“gilts”) and said the changes would bring it into line with its competitors’ offerings.

Luckily, several options pay far better rates than NS&I. The best alternative to a one-year Growth Bond is offered by Access Bank UK, paying 1.9pc. This is

0.65 percentage points, or 52pc, more than NS&I’s bond. For Income Bond alternatives that pay monthly interest, the best is from Wyelands Bank and pays 1.88pc, 56pc more.

All cash held with NS&I is guaranteed by the Treasury. For any other savings provider, cash is protected only up to £85,000 by the Financial Services Compensation Scheme, a lifeboat fund.

NS&I has withdrawn its Guaranteed Growth and Income Bonds