NS&I tops one-year savings bonds best buys

Wednesday, 28 October 2009 08:29

National Savings and Investments (NS&I) is leading the way on short-term savings bonds with a deal at 3.95 per cent.

The government-backed savings provider hit the market with week with its one-year guaranteed growth bond at 3.95 per cent - pushing up the rate by 2.95 per cent.

The deal beats the nearest rivals Saga and State Bank of India by 0.2 per cent in the one-year savings bond market - with both offering deals at 3.75 per cent.

NS&I has also launched a two-year bond at 4.25 per cent, a three-deal deal at 4.40 per cent and a five-year deal at 4.60 per cent.

The hike in savings rates is the break from the stereotype of NS&I as being boring, but safe.

An NS&I spokesperson said: "Our main focus remains offering the best rates for customers, balanced by the need of the Treasury and the wider market."

She added the savings provider was not looking to top all the best buy tables and rates are changed monthly to reflect the market.

NS&I has been able to push up its rates on its guaranteed growth bonds as they are now no longer sold via the Post Office, which is launching its own similar products.

The lowering of the costs from providing the deal through the Post Office has led to the increased savings rate.

Darren Cook at Moneyfacts.co.uk explained the move has left the competition unawares.

"It may take institutions a couple of days to sign off any response. It has left some scratching their heads," he said.

Mr Cook added the competition will now have to look at whether they can afford to match NS&I's rates as they try to balance lending and borrowing costs.

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