National Savings and Investments (NS&I) has announced it is to increase interest rates on a number of products, with its Direct ISA set to benefit from a hike of over one per cent.
The state owned savings institution is to up the rate of return offered on its Fixed Interest Savings Certificates, Children's Bonus Bonds and Direct ISAs.
Two and five year Savings Certificates from NS&I will offer 1.25% (+0.30%) and 2.25% (+0.35%) respectively when the rate changes come into effect from 19 August.
Its Children's Bonus Bonds' interest has been increased to 2.50% (+0.20%), while the NS&I Direct ISA will offer 2.50% - a significant increase of 1.20%.
These increases come at a time when competition for savers amongst the UK's banks and building societies is fierce, with many upping the amount they pay on customers' money, albeit on a relatively minor scale.
The bank said it has made the decision as it continues to follow a strategy designed to balance the interest of savers, the taxpayer and the stability of the financial services sector.
Interest on the bank's other savings products will remain unchanged
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