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Spring Budget 2024

NS&I British savings bond – a good deal for savers?

As NS&I announce the new British savings bond, and the chance to lock your money away for three years, we look at what impact it could have, and what you can do about it.

Important information - 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.

The savings landscape has a new British landmark.

NS&I are due to release a new British savings bond offering a guaranteed savings rate over three years.

What impact will it have?

All eyes will be on the rate on offer, which won’t be revealed until April.

But even the lure of the NS&I brand won’t make savers accept a disappointing rate.

With the Bank of England predicted to cut interest rates in the coming months, savers will need to think carefully whether they want to wait for this bond.

This article isn’t personal advice. If you’re not sure what’s right for your circumstances, seek advice.

Should I wait for the NS&I British savings bond?

There’s no certainty about the rate on offer. But NS&I have already said it will be priced mid-market.

At the moment, that would put them under the 4.20% mark.

If savings rates continue to fall, this could be lower by the time the rate is released in April.

Competitive three-year fixed rates, on the other hand, are above 4.50% right now – so you might think ‘what am I waiting for?’.

Savers might be attracted by NS&I’s 100% protection guarantee, which covers 100% of their clients’ money (up to £1 million). But for savings not with NS&I, you can get protection through the Financial Services Compensation Scheme (FSCS).

All UK banks and building societies that are authorised by the Prudential Regulation Authority offer FSCS cover of up to £85,000.

That means anyone can secure 100% cover for their money by spreading your savings across different organisations.

The limit is £85,000 of eligible deposits per banking licence. If you have money with different banks and building societies who share the same licence, you’ll only have a total of £85,000 protection through the FSCS.

What’s right for me?

As with picking any savings account, the account you choose should reflect your needs.

Worried about savings tax?

Over 2.5 million are estimated to pay savings tax this year. So, one of your needs might be to shelter your interest and save on paying more tax than you need to.

A Cash ISA lets you put away up to £20,000 tax free every tax year as part of your overall ISA allowance.

With the HL Cash ISA, you can spread your allowance across fixed rate and easy access savings. All offered by different banks, all in the same tax year.

Act before the 6 April to make the most of this year’s allowance.

Remember, ISA and tax rules for ISAs can change and their benefits depend on your personal circumstances.

Not worried about savings tax or already maxed out your ISA?

A savings platforms, like Active Savings, also lets you access a range of savings from a range of banks, all through one online account.

There are loads of competitive fixed rates. And you can spread money across fixed rates from a few months to five years, in whatever way suits you.

Products can be added or withdrawn at any time, so check our website for the latest. Remember, you can’t withdraw money from a fixed-term product until it matures. Inflation reduces the future spending power of money.

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.

Hargreaves Lansdown Asset Management Limited and Hargreaves Lansdown Savings Limited are subsidiaries of Hargreaves Lansdown plc (company number 2122142).

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Written by
Guy James
Guy James
Personal Finance Writer

Guy is a savings specialist, passionate about encouraging people to get to grips with their cash. An integral part of our Active Savings team, he aims to help as many people as possible secure their financial safety net, and make more of their cash.

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Article history
Published: 7th March 2024