As announced earlier this year, yesterday NS&I officially cut its savings rates and reduced the effective prize rate on its ever-popular Premium Bonds. So where can you put your hard-earned savings if you want to get a better return? We've done a bit of digging...
Find the best savings rates
Let's start by taking a look at the rates you now need to beat if you want to move your cash out of NS&I and into more profitable savings accounts:
- NS&I Direct ISA: rate cut from 1% to 0.75%.
- NS&I Direct Saver: rate cut from 0.80% to 0.70%.
- NS&I Income Bonds: rate cut from 1% to 0.75%.
- Premium Bonds: number of high-value prizes in each draw reduced, while low-value prizes have edged up. As a result, the chance of winning a prize remains at 1 in 30,000, but the effective prize rate has reduced from 1.25% to 1.15%.
The changes came into effect yesterday, Monday 1 May, and will impact savers across selected NS&I accounts and cash ISAs, together with those who want the chance to win big in its monthly draw. While there are a lot of savers who will want to stick with the security of a Government-backed provider, and many who won't mind forgoing interest in the hope of getting a bigger payout, there are plenty of options for those who want to start looking elsewhere:
- Top cash ISA
Let's say you want to move your ISA funds in the hope of getting a better return. First up, you'll want to check the specific rules of transferring cash ISAs, but then you'll need to start looking for an alternative; currently, the best cash ISA rate available comes from Paragon Bank, whose five-year ISA pays 1.75%. Or, if you want more flexibility, the top-paying variable rate ISA comes from Hinckley & Rugby Building Society, with its 120-day notice deal paying 1.20%.
- Best easy access account.
Since NS&I's traditional variable rate account now pays just 0.70%, it could be worth considering similar deals from RCI Bankor Britannia, both of whom offer the market-leading bonus-free easy access rate of 1.10%. Or, if you don't mind reviewing your account in a year's time, Yorkshire Building Society trumps them both with a rate of 1.15% (which includes a 12-month bonus of 0.55%).
- Best monthly income savings account.
If you want to secure a regular income from your savings, you'll need an account that pays interest monthly. In this sector of the market, you can't go wrong with Paragon Bank's 120-day notice account, which pays a rate of 1.30% AER on a monthly basis. Alternatively, if you still want easy access to your savings, Yorkshire Building Society's account again comes out on top.
- Top fixed rate bond.
NS&I hasn't altered the rate of its much-anticipated Investment Guaranteed Growth Bond, which still pays a market-leading 2.20% for three years, but as we've discussed, it may not be suitable for everyone. Instead, it could be worth looking at Milestone Savings' rate of 2.30% if you don't mind locking your money away for five years, or OakNorth Bank's rate of 1.91% if you still want a three-year bond but have more than £3,000 to invest.
It's all about comparing the best savings accounts to find the deal that works for you. You may decide that you want to stick with the security of NS&I, and could well want to keep at least a portion of your savings in the form of Premium Bonds, but don't forget that there are plenty of other options out there. Keep an eye on our Best Buys, or use our savings search tool to find the account that could perfectly meet your needs.