NS&I cuts its £1m savings limit

Written by Oliver Wade

NS&I has cut the savings limit on its one and three-year Guaranteed Growth Bonds and Guaranteed Income Bonds from £1m to £10,000, reported Hargreaves Lansdown.

However, it has said that its rates will stay the same, with Guaranteed Growth Bonds paying 1.5% over one year and 1.95% over three years.

Hargreaves Lansdown said that the bonds had been “incredibly popular”, due to almost 900,000 three-year pensioner bonds maturing between January and May and automatically being rolled into the three-year Guaranteed Growth Bond, unless savers had chosen to opt out.

Hargreaves Lansdown personal finance analyst Sarah Coles said: “Savers with a lot of cash loved these products, because they could save up to £1 million in each, with a government-backed guarantee. If they are to save elsewhere, the first £85,000 is protected by the Financial Services Compensation Scheme, but if they have more than this, they need to spread their money around.

“There’s a stay of execution for existing NS&I savers, because if they roll their money into these bonds at maturity, they’ll get a £1 million limit.”

However, the firm also said that savers can get better interest rates elsewhere, up to 2.31%.

“New savers should look elsewhere for a better rate. The three-year NS&I Guaranteed Growth Bond offers 1.95% interest, which is well below the most competitive fixed rate over this period (2.31% from RCI Bank). Competition in the one-year fixed rate account market, meanwhile, has been intensifying in recent weeks, so you can now get up to 2.05% (Atom Bank) compared to the 1.5% available from NS&I’s Guaranteed Growth Bond,” Coles added.

“In both instances, even if they have £1 million and have to spread it over the 12 most competitive accounts in order to ensure their money is protected by the FSCS, savers will still get a better rate on even the least competitive of the 12 than they would from NS&I at the moment.”

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