National Savings and Investments (NS&I) has increased the interest rates on its fixed-term British Savings Bonds. NS&I is a popular option for savers, as it is a state-owned institution backed by HM Treasury, ensuring savings are 100% secure without limit. The latest products are 'new issues' of NS&I’s Guaranteed Growth Bonds and Guaranteed Income Bonds, which went on sale on 7th November 2025. While not table-topping, they offer competitive rates for savers looking for a fixed return, with the one-year bond now paying 4.20% AER.
What are the new NS&I Fixed Bond rates?
The new rates apply to all four fixed-term lengths, with the most significant increase on the two-year bond.
The new NS&I British Savings Bonds rates are:
- 1-Year NS&I Fixed Bond: 4.20% AER (up from 4.04% AER)
- 2-Year NS&I Fixed Bond: 4.10% AER (up from 3.85% AER)
- 3-Year NS&I Fixed Bond: 4.16% AER (up from 3.88% AER)
- 5-Year NS&I Fixed Bond: 4.15% AER (up from 3.84% AER)
How do the British Savings Bonds work?
Savers have two options for receiving their interest, and the rates above apply to both.
- Guaranteed Growth Bonds - The interest is paid annually and compounds within the bond itself. You can only access the interest when the bond matures at the end of its term.
- Guaranteed Income Bonds - The interest is paid out monthly into your linked bank account. This option does not compound, as the interest is paid out instead of being added to the bond.
For both types of bond, the minimum investment is £500, and the maximum is £1 million per person, per issue. It is essential to note that these are fixed-term products, which means you cannot withdraw your money until the end of your chosen term.
How do the new NS&I rates compare?
While the new rates are competitive, the NS&I British Savings Bonds do not feature in any of our best buy savings tables, where we list the best savings rates in the market. For example, the new 1-year NS&I bond pays 4.20% AER, however, the top 1-year fixed bond from Monument currently pays 4.47% AER. Similarly, the 3-year NS&I bond offers 4.16% AER, while the market-leading equivalent from JN Bank UK pays 4.39% AER. This means savers willing to shop around can find higher rates elsewhere.
What to consider before saving with NS&I
The main appeal of all NS&I products is security. Because NS&I is state-owned, it is backed by HM Treasury, which means 100% of your savings are secure. This is different from standard UK-regulated banks and building societies, which are protected by the Financial Services Compensation Scheme (FSCS) up to a limit of £85,000 per person, per institution. This makes NS&I bonds particularly attractive for those who have substantial savings and want them fully protected in one place.
However, there are two key points to remember:
- Interest is taxable - Unlike NS&I's popular Premium Bonds, where prizes are tax-free, any interest earned from British Savings Bonds are taxable.
- Be mindful of the tax timing - If you choose a Guaranteed Growth Bond, all interest is paid in a single lump sum upon the bond's maturity. This could mean a 3-year bond pays three years' worth of interest on one day, which could easily push you over your annual Personal Savings Allowance and result in a significant tax bill. You could instead opt for a Guaranteed Income Bond, which pays interest on a monthly basis. The trade-off is that you will not benefit from your interest compounding over time.
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