NS&I raises savings rates: What you need to know

National Savings & Investments (NS&I) is set to raise the interest rates on three of its savings accounts from the end of this month in order to meet annual financing targets. It follows on from NS&I’s decision to slash rates on many of its savings products in November 2020.

NS&I interest rate changes

Below is a summary of the changes to 3 NS&I savings products, including upcoming rates as well as where they were at a year ago.

Direct Saver

NS&I’s Direct Saver rate will increase from 0.15% to 0.35% on 29 December 2021 (+20 basis points). In November last year, its rate was 1.00%.

Interest Rate from 29 December 2021	Current Interest Rate	Interest Rate on 23 November 2020
0.35%	0.15%	1.00%

Income Bonds

NS&I’s Income Bonds rates will increase from 0.15% to 0.35% on 29 December 2021 (+20 basis points). In November last year, the rate was 1.15%.

Interest Rate from 29 December 2021	Current Interest Rate	Interest Rate on 23 November 2020
0.35%	0.15%	1.15%

Direct ISA

NS&I’s Direct ISA rate will increase from 0.10% to 0.35% on 29 December 2021 (+25 basis points). In November last year, its rate was 0.90%.

Interest Rate from 29 December 2021	Current Interest Rate	Interest Rate on 23 November 2020
0.35%	0.10%	0.90%

What about Premium Bonds?

Premium Bonds will not change from their current rate at 1%. In November last year, the rate was 1.40%.

Current Interest Rate	Interest Rate on 23 November 2020
1.00%	1.40%

Why is NS&I raising interest rates?

NS&I had slashed interest rates by as much as 175 basis points on some of its savings products on 24 November 2020, driven by the historically low Bank of England (BoE) base rate and high customer demand.

Since then, however, the Bank of England has voted to raise rates once again, increasing the base rate to 0.25% following its December meeting. This change will soon begin to trickle down to the savings market as providers adjust their rates accordingly. NS&I is among the first to do so.

The move is also due to the bank’s need to catch up with its annual financing target. NS&I’s net financing target for April 2021 to April 2022 is £6 billion, but it had only managed some £600 million by October, meaning just 10% of the target was deposited in NS&I savings accounts in the first half of the financial year.

Meanwhile, NS&I launched its brand new Green Savings Bonds back in October, designed to help customers save while also investing in climate-conscious projects. Head over to “NS&I launches Green Savings Bonds: How do they measure up?” for more details.

NS&I savings rates compared

Despite the imminent changes to NS&I’s savings rates, its products remain behind much of what is being offered elsewhere on the market, and savers can secure themselves a better deal by shopping around.

For example, you can currently get up to 0.71% on Investec’s Online Flexi Saver, the top Easy Access account on offer. Elsewhere, the best Variable Rate ISA comes from Shawbrook Bank at 0.93%, while its Fixed Rate ISA is also available at a market-leading 0.67%.

Keep an eye on our savings best buy tables for the latest on the best savings rates, from ISAs to bonds to children’s accounts, so you can find the best deal for you.

More on saving

For more of the best ways to save on the market, check out the following articles:

• Best cash savings platforms in the UK
• Best savings apps in the UK
• Best savings account for £100,000