NS&I doubles interest on Green Savings Bond but returns still lag market leaders
NS&I has doubled the rate of interest it pays on its Green Savings Bond – but the returns still lag the market-leading deals and leave savers’ cash being eroded by inflation.
The latest issue of the three-year account from the government-backed savings provider will pay a rate of 1.3%, up from the 0.65% on offer at its launch, which wasdescribed by experts at the time as “paltry”.
The account, which is available to anyone over 16, invests in projects to fight climate change, including efforts to make transport greener and increase renewable energy use.
Savers can deposit from £100 to £100,000 and are not allowed to withdraw their money after the 30-day initial cooling-off period.
Announcing the new rate, the economic secretary to the Treasury, John Glen, said it “reflects upward movement across the wider fixed-term market”.
However, experts said the initial deal fell well short of what was on offer elsewhere and was unlikely to attract all but the keenest green savers.
The new rate is not the best on the market but it does mean that you do not have to sacrifice too much interest to support environmental projects.
If higher returns are your priority, elsewhere you can earn 1.85% on a three-year savings bond from several providers, including Tandem, an app-based account provider that also claims to have environmental credentials.
Locking in for only one-year, which may be preferable at a time of rising interest rates, could also be more lucrative, said Anna Bowes of the website Savings Champion. Al Rayan Bank is advertising a return of 1.45% over 12 months – it is an “expected rate” but if the bank adjusts it down you can withdraw your money without penalty. The minimum deposit is £5,000.
Across the market the interest on offer is
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