British savings bonds, first announced in the Budget, have gone on sale today (April 3) issued by National Savings and Investments.
The three year fixed-rate bonds pay 4.15 per cent and are available on investments between £500 and £1mn.
NS&I Chief Executive, Dax Harkins, said: “British Savings Bonds are there to help people save for the longer term and support their savings goals, safe in the knowledge that their investments are 100 per cent protected.
“As with all savings with NS&I, money is invested back into supporting the UK through government financing.”
The two versions of the bond available are: Guaranteed Growth Bonds which pay 4.15 per cent over three years and Guaranteed Income Bonds which pay 4.07 per cent over three years.
Laura Suter, director of personal finance at AJ Bell, said the new bonds are a “fancy bit of marketing” and are not any different to putting money into other NS&I products.
She said: “The government-backed provider has instead re-badged the previous Guaranteed Income and Guaranteed Growth bonds, issuing a three-year version of those accounts.
“A previous one-year version of the bonds that was launched last Autumn was so popular it sold out in just five weeks. However, those bonds came with a 6.2 per cent interest rate on them that is far above this new offer.
“The 4.15 per cent interest rate is a long way from top of the tables, with 27 other providers offering three-year bonds with higher interest rates.”
Suter said it was up to savers to weigh up whether it was worth sacrificing higher interest rates to choose the NS&I products.
She added: “It’s tricky for NS&I to get the interest rate right on these products: too high and they’ll attract swathes of cash and have to pull the accounts from sale, too low and savers will go elsewhere, meaning NS&I will have to crank up the interest rate later.”
tara.o'connor@ft.com
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