NS&I raises fixed bond rates to 5.17% as it seeks savers’ cash
National Savings & Investments has raised rates on its fixed-term bonds, offering up to 5.17 per cent and bringing some deals close to the top of the market. The move comes as NS&I tries to attract savers while catching up with a Government target to raise £15 billion by the end of next March.
Growth Bonds pay interest at the end of the term, while Income Bonds pay it monthly. Growth rates are 4.99 per cent for one year, 5.07 per cent for two years, 5.1 per cent for three years and 5.17 per cent for five years; monthly Income Bond rates range from 4.88 to 5.06 per cent. Some competitors pay slightly more, but NS&I guarantees all money invested, while the article says other banks’ deposits are protected up to £120,000. With Growth Bonds, interest paid at maturity may count towards the saver’s annual tax-free allowance all in that tax year.
- NS&I is offering fixed-term bond rates of up to 5.17 per cent.
- Its one-year Growth Bond pays 4.99 per cent.
- Growth Bond interest is paid at maturity and may affect tax allowances.
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NS&I, or National Savings & Investments, is a government-backed organisation that helps people save money. Fixed-term bonds are savings accounts where money is deposited for a set period—such as one to five years—and earns a guaranteed interest rate, paid at the end or monthly.
The interest rate determines how much extra money savers earn during the bond period. Higher rates are more attractive because savings grow faster. People shopping for savings typically compare rates across different organisations to find the best deals.
NS&I is raising rates to attract more savers and compete with commercial banks. The organisation is working towards a government target to raise £15 billion by the end of March, and offering more competitive rates helps achieve this goal.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
NS&I's competitive rates offer savers genuine value combined with full government backing, which provides superior protection compared to the £120,000 limit at private banks. Government borrowing through retail savings is a legitimate and efficient funding mechanism at market rates, and encouraging a savings culture is economically beneficial. The rates remain within competitive range rather than excessively subsidised, reflecting genuine market conditions.
The case against
NS&I requiring rate rises to meet government funding targets suggests uncomfortable reliance on retail borrowing rather than traditional markets, potentially masking broader fiscal concerns. Using state-backed guarantees to compete with private banks creates market distortion and may harm financial competition. Funding generous returns through public resources means taxpayers ultimately subsidise savers who can afford to lock away capital, with questionable benefit compared to alternative public spending.
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Originally published by Daily Mail as “NS&I launches a 5.17% savings deal… and there’s even better to come: SYLVIA MORRIS”.