NS&I boosts ‘green’ savings bonds to almost 6pc


The nation’s favourite savings organisation has increased the rate it pays on a popular account by 36pc in an effort to offer better rates to green-minded customers.

Savers can now earn a market-leading 5.7pc on National Savings & Investments’ Green Savings Bonds over a three-year term, compared with 4.2pc previously. The bonds were introduced in 2021 and help to finance eco-friendly projects as part of the Government’s Green Financing Framework.

The minimum holding is £100 and savers can buy £100,000 of the bonds in each release, with a cooling-off period of 30 days before the cash is locked away.

Dax Harkins, NS&I’s chief executive, said: “I’m pleased that we can offer a new issue of our Green Savings Bonds at a higher rate from today. This is a great opportunity for savers who want to see a guaranteed return while also making a difference with their savings by helping to make the world greener, cleaner and more sustainable.”

But while the guaranteed rate is close to the top of the best-buy tables for three-year fixed-rate bonds, the Treasury-backed provider is not the very best option over three years. The best payer is Recognise Bank at 6.05pc, while those who fix for two years with the bank can earn 6.1pc.

Four-year and five-year bonds pay between 5.8pc and 5.85pc as providers are cautious about longer-term returns.

Laura Suter of AJ Bell, the savings and investments firm, said savers should be aware that while the Bank Rate was not expected to increase much further, fixed-rate offerings might still improve.

“Three years is also a long time to lock away money for with no chance of early exit, so savers need to be certain they won’t want access to the cash in that time.”

Anna Bowes, of comparison site Savings Champion, said savers who have already invested will not see an increase in their returns, adding new customers should be aware that the earnings may be subject to tax the year the bond matures.

She said: “With other bonds, if you at least have the option to choose to have the interest paid out or compounded, the interest is deemed to be paid annually and therefore should be added to your taxable income each year.

“So, if you were to deposit £100,000 you will receive interest of £18,093.22 on maturity, which will be added to your taxable income at that point.

“Unfortunately, those early adopters of the Green Savings Bonds will not see an increase to their interest – they will continue to earn between 0.65pc for Issue 1, 1.30pc for Issue 2, 3pc for Issue 3, and 4.20pc for Issue 4, until the end of the term.”

For savers who need earlier access to their money, building society West Brom has launched a 60-day notice account paying 5.25pc on up to £1m.