Are British Savings Bonds competitive?
Products from NS&I usually prove popular among savers as, unlike other providers, the brand is backed by HM Treasury. Because of this, it doesn’t necessarily need to offer the most competitive rates in order to attract customers.
That being said, its new two and five-year British Savings Bonds offer above-average returns. At the start of August, a typical two and five-year fixed bond paid gross rates of 4.33% and 3.92%, respectively, according to Moneyfacts’ data.
Nevertheless, higher rates are available, particularly if you’re willing to consider mutuals and challenger banks. For instance, at the time of writing, Harpenden BS offers the market-leading two-year fixed rate with its 2 Year Fixed Rate Bond (Issue 5) paying 4.96% AER.
As for the best five-year fixed rate, Al Rayan Bank’s Raisin UK – 5 Year Fixed Term Deposit pays an expected profit rate of 4.55% AER. This Shari’ah-compliant account is accessible via the third-party savings platform, Raisin UK.
However, savers may need to act quickly to take advantage of an attractive deal before it disappears – especially as fixed rates have fallen over recent months.
“Fixed bonds that hit their deposit targets can be withdrawn from sale, but those that stay on sale can also slash the rates offered depending on how the rest of the market is moving,” Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, explained.
