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NS&I has re-launched its one and three-year fixed rate Guaranteed Growth Bonds and Guaranteed Investment Bonds to general sale for the first time since 2009, in a move touted as "another boost for savers".
The Government-backed provider says that the new fixed rate bonds will be exclusively available online through nsandi.com, after which they can be managed by phone and post as well. They require a minimum investment of £500 up to a maximum of £1 million per person per issue, and although they're designed to be kept for the whole term, funds can be accessed early on the loss of 90 days' interest. The main difference between the two is that they'll pay slightly different interest rates:
It's worth pointing out that these bonds are different to the three-year Investment Guaranteed Growth Bonds, which were launched earlier this year and are still available, albeit with lower investment limits.
"We are really pleased to be able to bring Guaranteed Growth Bonds and Guaranteed Income Bonds back on sale, which is another boost to savers following the rate increases to our variable rate products, including Premium Bonds, on 1 December," said Ian Ackerley, chief executive at NS&I.
"Savers can already invest up to £3,000 in the three-year Investment Guaranteed Growth Bond, which is on sale until April 2018. These issues of Guaranteed Growth Bonds and Guaranteed Income Bonds will also help those who want a one-year investment or who want to invest additional savings for three years.
"As well as being able to invest up to £1 million per person per issue in our one or three-year Bonds, savers will also benefit from NS&I's 100% HM Treasury guarantee."
While any headline-grabbing deal will undoubtedly be welcome news for savers, the question is, are these new options actually any good?
Well, if you compare them with the best fixed rate bonds available, you'll see that the one-year deals fall far short. NS&I will pay 1.50% AER on its Guaranteed Growth Bond and 1.46% on its Income version, yet neither of these will even come close to making it into the Best Buys; currently, the best one-year fixed bond available BLME pays an expected profit rate of 2.00% if you've got at least £25,000 to invest, or if not, Atom Bank offers 1.95% from a minimum investment of just £50.
It's only in the three-year bond sector where NS&I starts to compete, and although the rates of 2.20% and 2.17% AER aren't quite market-leading, they're not far off. Again, Atom Bank and BLME take pride of place in the charts, but this time, they're the only deals to beat NS&I, which is already in third place with its Investment Guaranteed Growth Bond paying 2.20%.
This shows that, while the new three-year offers could be well worth considering, if you want a short-term home for your money, you may be better off looking elsewhere – unless, perhaps, you've got a truly significant amount to invest.
This is because the key difference with NS&I's offering is the Treasury backing, which will be particularly significant if you've got more than £85,000 to invest; the FSCS will only cover the first £85,000 held with any bank or building society should that institution go bust, and while highly unlikely, some big investors may prefer the security of knowing that 100% of their deposit is protected.
That being said, you don't have to limit yourself; there's nothing to stop you splitting your investment between several different savings accounts if it means you'll get a better savings rate. So, while NS&I could be the perfect option for some, others may want to look elsewhere; start by checking out the best savings rates using our Best Buys and make your money work even harder.
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