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NS&I interest rates slashed – how to get more from your savings

National Savings and Investments (NS&I) has cut some of its rates to rock bottom. Here’s how you could get more from your savings and potentially get cashback at the same time.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

NS&I has slashed the interest rate on its range of savings accounts. If you have money in its Income Bonds or Investment Account, you’ll now earn 0.01%.

That’s just £1 on a savings pot of £10,000.

Premium Bonds are also affected. The interest rate on the prize fund has dropped. You’ve now only got a 1 in 34,500 chance of winning the lowest prize of £25, compared with 24,500:1 before. The majority of Premium Bonds won’t win anything.

Latest NS&I savings rates

Account Old rate (AER) New rate (AER)
Premium Bond Prize Fund 1.40% 1.00%
Direct ISA 0.90% 0.10%
Direct Saver 1.00% 0.15%
Income Bonds 1.16% 0.01%
Investment Account 0.80% 0.01%
Junior ISA 3.25% 1.50%

Source: NS&I website, 18 Nov 2020

Big high street banks, normally the first port of call for savers, are also offering just 0.01% on instant access accounts. And their fixed terms are uncompetitive too. The cuts have left millions of savers wondering where to turn to get their cash working hard.

Two ways to get more from your savings accounts

  1. Think about smaller banks

  2. Smaller banks are paying much better rates. They don’t benefit from having existing relationships with millions of customers like the high street giants do. They need to offer much higher rates to bring money in.

    There’s a limit to how much money these banks can absorb, so you might not see their top rates available for long. It’s likely their products will fill up fast, or their rates will drop to reduce inflows.

    This could mean the market changes quickly. Which makes it a hassle to make sure you’re getting a good return.

    Are you waiting for a great savings rate? Sign up to our alerts and we’ll tell you when a great rate is added to Active Savings.

  3. Fixed term savings accounts could help

  4. Fixed term accounts usually give much better rates than instant access accounts. But the trade-off is that you can’t usually access your money until they end.

    You can typically fix from just a few months up to five years. Generally the longer you fix for the better the rate is.

    For any money you don’t think you’ll need to access quickly, you could think about fixed terms. Why not use fixed terms of different lengths? You’ll get a better overall rate, while making sure you have some money coming back to you regularly.

    You’d be forgiven for thinking all this sounds like hard work. But there’s a solution.

An easy way to get a better return on your savings

The Active Savings service could help. In one online account you can choose easy access and fixed term savings products from a range of banks and building societies.

It cuts out the hassle of opening new products with new providers. Once you’re set up, you can choose new products in just a few clicks. No paperwork, no need to prove who you are every time and no need to remember new sets of security information.

If you have any other HL accounts, you’ll see everything together when you log in.

And you’ll find a selection of great rates. You can currently get 54 times more than NS&I and the big banks on an easy access account. You could get more on a fixed term product.

We’ll even send you alerts when great rates are added, so you can keep your money working as hard as you do.

Please note, instant access products allow immediate withdrawals. The Active Savings service offers easy access products and withdrawals usually take one working day.

Remember that inflation can reduce the spending power of money. Easy access products pay a variable rate and fixed term products pay a fixed rate. Check out our recent article Is inflation nibbling away at your savings?

The best rates on Active Savings

Easy access

Up to
0.35% | 0.35%
(AER | Gross)

Up to 1 year

Up to
1.05% | 1.05%
(AER | Gross)

Up to 2 years

Up to
1.17% | 1.17%
(AER | Gross)

Up to 3 years

Up to
1.22% | 1.22%
(AER | Gross)

Easy access

Up to
0.35% | 0.35%
(AER | Gross)

Up to 1 year

Up to
1.05% | 1.05%
(AER | Gross)

Up to 3 years

Up to
1.22% | 1.22%
(AER | Gross)

Find out more

Please note the products above are some of our most popular, but more are available. Click the link above to see our full range. Products can be added or withdrawn at any time. Minimum deposit requirements apply to individual products. Easy access products pay a variable rate and fixed term products pay a fixed rate.

AER (Annual Equivalent Rate) shows what the interest rate/expected profit rate would be if it was paid and compounded once each year. It helps you compare the rates on different savings products. Once you have opened a fixed term product the rate won't change, but rates on easy access products can vary.

Gross means the rate without any tax removed. Interest/profits are paid gross. You are responsible for paying any tax due on interest/profits that exceed your Personal Savings Allowance to HM Revenue & Customs. Tax treatment can change.

How safe is your money?

The government security on deposits with NS&I is popular with savers. But that doesn’t mean other banks are unsafe. Regulated banks are covered by the Financial Services Compensation Scheme (FSCS).

Under the FSCS, eligible deposits are protected up to £85,000 per banking licence. All our partner banks on Active Savings are covered by the FSCS.

Get cashback on your savings - act by 2 December

Get cashback in two easy steps:

  1. Open an Active Savings account by 2 December.
  2. Add at least £10,000 by debit card and choose your savings products within 60 days.

If your balance drops below your cash offer qualifying amount within 6 months we may reclaim your cashback. Terms apply.

The Active Savings service is provided by Hargreaves Lansdown Savings Limited (company number 8355960). Hargreaves Lansdown Savings Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 with firm reference 901007 for the issuing of electronic money.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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