A new issue of National Savings and Investments’ (NS&I’s) green savings bonds has been released, paying a 5.70% gross fixed rate over a three-year term.

Savers putting money into green savings bonds will be helping fund vital green projects across the UK as part of the Government’s green financing framework.

NS&I, formerly the Post Office Savings Bank and National Savings, is a state-owned savings bank and both a non-ministerial Government department and an executive agency of the Treasury.

It revealed that the projects funded through green savings bonds will include making transport greener, using renewable energy over fossil fuels, preventing pollution, using energy more efficiently, protecting natural resources and adapting to a changing climate. The first issue of green savings bonds went on sale in October 2021 and since then, more than £915m has been invested in them.

The minimum investment in the bonds is £100, with a maximum limit of £100,000 per person for each issue.

NS&I chief executive, Dax Harkins, said: “I’m really 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 on their investment while also making a difference with their savings by helping to make the world greener, cleaner and more sustainable.”

Commenting on the new bond issue, head of personal finance at AJ Bell, Laura Suter, said the rate on the bond now is a “far cry” from the 0.65% at its launch almost two years ago. She suggested this partly reflects the steep rise in interest rates in the savings market since then, but is also a result of slow initial take-up of NS&I’s newest product.

“Someone who put £5,000 into the bonds at launch will be earning just £32.50 a year in interest, compared to the £285 a year that a new customer will be getting today on the same amount,” Suter commented. “If they had invested £20,000 that difference in interest jumps to more than £1,000 a year.

“Anyone who has recently bought the bonds might have time to switch out and get a better rate. The bond has an initial 30-day cooling off period, where people can get their money back, but once savers are past that point they are locked in for three years. That means anyone who bought the bonds in the past 30 days could cancel their accounts and re-open a new one to benefit from the higher rate.

“For savers who are past the 30-day cooling off period it highlights the difficulty of navigating the fixed rate market at the moment, as rates are changing so quickly.”

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