- The rate on the three-year bond has been cut from 5.7% to 3.95%
- For someone with £10,000 saved that’s a loss of £577 in interest across the three years
- NS&I rate is now significantly below the current top provider for a three-year bond
Laura Suter, head of personal finance at AJ Bell, comments on NS&I’s decision to cut the rate on its Green Savings Bond:
“NS&I has once again wielded the axe to its savings rates, this time slashing the rate on its eco-savings product. This is a trend we’re likely to see on repeat, as many expect that we’ve hit peak interest rates and that savings rates will only drop from here.
“The government-backed provider has cut the rate on its three-year Green Savings Bond from 5.7% down to 3.95%. For someone with £10,000 saved that’s a loss of £577 in interest across the three years*. The cut also puts rates below where they were at earlier this year, with the three-year bonds paying 4.2% up until February.
“After a fairly dismal summer for inflows, we know that NS&I’s guaranteed bonds attracted a huge amount of savers’ money – meaning the provider has already hit its funding target for the year. In turn, that means its other savings products will become less attractive, as it doesn’t need to use high rates to lure more savers in.
“The NS&I rate is now significantly below the current top provider for a three-year bond – which is from JN Bank and pays 5.9%. The rate is also below some of the other environmentally-focused accounts on the market, many of which don’t require a three-year tie-up to beat the rate. Anyone hunting around for a green savings option needs to scrutinise the competition carefully, to ensure that what they are doing with their money tallies with their own beliefs.”
*Assuming annual compounding.
