Looking for somewhere new to put your money? National Savings & Investments (NS&I), the government-owned bank, has launched a new bond paying 2.2% interest on a maximum of £3,000 over a three-year term.
Here we take a look at the NS&I investment bond 2017.
Get the Best Savings Rate
NS&I Bond 2017: What You Need to Know
It’s available until 10 April 2018 for anyone aged 16 or over and pays 2.2% over three years on a maximum £3,000 (minimum £100).
- Interest is calculated daily
- Online only – open it and manage it via the web
- You need to put all your money into the bond when you open it – you cannot top it up later on
If you put £1,000 in the NS&I bond, you would have £1,067.46 at the end of the three-year term.
Is the NS&I Bond a Market Leader?
However, the Atom product is only available via an app, so might not be for you. Other than that, the NS&I bond rate, at the time of writing, does beat that of many other bonds available, albeit only marginally.
Commentators have pointed out that the NS&I bond is beaten by rates offered by some bank accounts. Tesco, for example, has a current account offering a guaranteed 3% on balances up to £3,000 until 1 April 2019.
What’s more, some of the other bonds allow you to put more in than the maximum allowed in the NS&I bond – £3,000. So while these other bonds may pay less interest, you will get that interest on a larger amount of money.
Is the NS&I Growth Bond Inflation-beating?
There is also the important issue of inflation. This bond, guaranteeing 2.2%, is designed to hold your cash over the three years, without you withdrawing any money.
However, with inflation rising and currently at 2.7%, an account offering 2.2% means your money has less purchasing power and in real terms, you are effectively losing money.
That’s why some commentators are calling on the government to introduce an inflation-linked NS&I savings product that matches or beats inflation, so your money keeps its purchasing power.
In terms of risk, the NS&I savings products are truly 100% secure as they are backed by HM Treasury.