NS&I’S new British Savings Bonds rate finally revealed

NS&I has launched new three-year fixed-rate British Savings Bonds, paying up to 4.15pc interest.

But experts said the launch was simply a “fancy bit of marketing” and that the rate was not likely to tempt many savers to part with their cash.

The bonds are actually new threeyear fixed-rate issues of NS&I’S existing Guaranteed Growth Bonds, paying 4.15pc interest, and Guaranteed Income Bonds, paying 4.07pc.

It comes as expectations grow that the Bank of England will cut interest rates over the next few months, boosting the appeal of longer-term fixed-rate accounts.

Jeremy Hunt, the Chancellor, announced the launch of the bonds in the spring Budget but the rate was only announced yesterday.

Like other accounts offered by NS&I, the bonds are backed by the Treasury, meaning savers’ money is protected in full, compared to the £85,000 limit that applies to deposits held by banks.

The British bonds pay a guaranteed interest rate fixed over three years for investments between £500 and £1m. Money held by NS&I is used by the Government as one way of raising funds.

However, experts said the relatively low rates could doom the bonds to “mid-table mediocrity”, said Sarah Coles, head of personal finance at stockbroker Hargreaves Lansdown.

Laura Suter, of AJ Bell, another broker, said: “The bonds are a fancy bit of marketing and aren’t actually any different to putting your money in other NS&I products.”

A deposit of £1m in Guaranteed Growth Bonds would earn the saver £132,338.78 over the three year period.

Ms Coles suggests customers could do better putting their money into “easy-access” and short-term fixed accounts that pay higher rates.

“These NS&I rates just aren’t special enough to persuade swathes of new savers to tie their money up for longer.

“However, at the moment, there are decent rates available on longer fixes that are worth considering.”

The best rate on the market at the moment is Ulster Bank’s Loyalty Saver easy access account, paying 5.2pc, with interest paid annually on savings between £1 and £1m.

Dax Harkins, the NS&I chief executive, said: “British savings bonds are there to help people save for the longer term and support their savings goals, safe in the knowledge that their investments are 100pc protected.

“As with all savings with NS&I, money is invested back into supporting the UK through government financing.”