National Savings and Investments (NS&I) has cut the interest rate on its three-year Guaranteed Growth and Income bonds by 0.25%.
The treasury-backed savings provider says it’s had to tweak the rates because of their popularity since they were relaunched in December 2017.
Which? takes a look at what the change means for savers with maturing NS&I ‘pensioner bonds’ and how the new rates compare.
NS&I is cutting the rate on its three-year Guaranteed Growth Bond from 2.2% to 1.95% AER, and the rate on its three-year Guaranteed Income Bond from 2.17% to 1.92% AER.
|Current Issue (Issue 56)||New Issue (Issue 57)||Effective from|
|Guaranteed Growth Three-Year Bond||2.2% gross/AER||1.95% gross/AER||6 March 2018|
|Guaranteed Income Three-year Bonds||2.15% gross/2.17% AER||1.9% gross/1.92% AER||6 March 2018|
However, the rate on the one-year terms of both the growth and income products will remain unchanged at 1.5% AER and 1.46% AER respectively.
Investment Guaranteed Growth Bonds will remain on sale until 10 April 2018 at the rate of 2.2% gross/AER, fixed for three years.
These bonds are open to people aged 16 and over and have a minimum investment of £100 and a maximum investment of £3,000.
Why has NS&I cut the rates so soon?
NS&I relaunched Guaranteed Growth Bonds and Guaranteed Income Bonds just over three months ago on 4 December 2017.
But it says it now needs to cut rates thanks to their popularity.
NS&I has a Net Financing target so needs to tweak rates on products to ensure it doesn’t exceed or fall short of this mark.
The target for 2017-18 was revised in the Autumn Budget on 22 November 2017 to £8bn, with room £3bn either side of this, from £5bn to £11bn.
Jill Waters, retail director at NS&I, said: ‘It is always a difficult decision to reduce rates but these changes will allow us to manage demand in order to achieve our Net Financing target, while continuing to deliver positive value to taxpayers.
‘The new rates present a fair offer, and customers continue to benefit from a high holding limit and 100% security on all deposits.’
What it means for you
If you have a maturing three-year Guaranteed Growth Bond or 65+ Guaranteed Growth Bond (commonly known as ‘pensioner bonds’) you don’t need to worry.
You will be able to roll over your investment for another three-year term at a rate of 2.2% AER as stated in your maturity pack – the change only applies to new customers.
However, this doesn’t mean you should necessarily settle, as there may be a better rate for your cash or you may prefer to fix for a shorter or longer period.
You can find the best deals across easy-access and fixed-rate bonds using Which? Money Compare. We’ve picked out the top-paying deals for deposits across a range of terms below.
|Type of deal||Rate (AER)||Minimum deposit|
|RCI Freedom Savings Account||Easy-access account||1.3%||£100|
|Masthaven One-Year Fixed Rate Bond||One-year fixed-rate bond||1.9%||£500|
|Ikano Bank Two-Year Fixed Saver||Two-year fixed-rate bond||2.1%||£1,000|
|Ikano Bank Three-Year Fixed Saver||Three-year fixed-rate bond||2.26%||£1,000|
|Vanquis Bank Four-Year Fixed Rate Bond||Four-year fixed-rate bond||2.42%||£1,000|
|Ikano Bank Five-Year Fixed Saver||Five-year fixed-rate bond||2.52%||£1,000|
Source: Which? Money Compare
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