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Today, National Savings & Investments (NS&I) announced that they are reducing the maximum you can put into their Guaranteed Growth Bonds and Guaranteed Income Bonds with terms of one and three years. With our data showing that there are much better deals out there (none make the Best Buys anymore), is it time for fixed bond savers to move away from the NS&I?
The main benefit of NS&I is that, due to its Government backing, any savings you have in these accounts will be protected. This is compared to other savings accounts, which tend to be protected by the FSCS (or a similar foreign depositor protection scheme). In FSCS-protected accounts, £85,000 is protected per savings provider. As the NS&I bonds previously had a limit of £1 million, this means a lot more of a savers' funds could be protected.
While savers with maturing bonds will be able to reinvest the full value of their current pot, which means current customers aren't affected by today's change, anyone who signs up to the new issues from today will only be able to put away £10,000 (£20,000 for joint accounts). Given that the rates on offer on the one-year Growth and Income bonds are 1.50% and 1.46% AER respectively, with the three-year equivalents paying out 1.95% and 1.92% AER, the fact that you can now save less than the FSCS limit means there is even less incentive to sign up.
A look at our one-year fixed bond Best Buy chart reveals that the top rate currently comes from Atom Bank, at 2.05%, followed closely by Gatehouse Bank (expected profit 2.00%) and (expected profit 1.95%). Meanwhile, the top rate over three years comes from Gatehouse Bank, with an expected profit rate of 2.33%, followed by with a rate of 2.31% and Atom Bank again (2.30%). As the top three one-year bonds can beat or match NS&I's three-year offering, there's clearly plenty of reason to look elsewhere.
Of course, because NS&I is so closely related to the Government, it might just be the case that they want less savers because their accounts are too popular at the moment. Indeed, as Jill Waters from NS&I said: "these changes to the investment limit will allow us to manage demand in order to achieve our Net Financing target for 2018-19, while continuing to deliver positive value to taxpayers."
If you are still interested in such a Government-backed savings account, it could be a good idea to keep an eye on our savings charts – as well as the news – so you can take advantage if/when NS&I decides they can afford to attract savers again. In the meantime, it's worth looking into the rates offered by challenger banks for a market-leading savings account.
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