NS&I also boosts Junior ISA interest rate.
Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “NS&I has once again sweetened its popular flagship product in a bid to meet a lofty target set by the government to attract £7.5 billion from savers in the current tax year, which is 25% more than the £6 billion target for the previous year. It is a tall order for the government-sponsored bank facing stiff competition from other savings providers. Easy-access savings rates have hit 4% for the first time since 2009, and market-leading one, two, three and five-year fixed bonds all offer 5.30% or more, according to Moneyfacts.
“The Premium Bonds prize fund rate will hit a 15-year high from next month - but that does not mean the average person will get the heightened rate on their savings. Premium Bonds can be fun lottery-style alternatives to an easy-access savings account and might tempt some savers hoping for good luck to bolster their wealth amid the cost-of-living crisis. But the fact remains that while some savers might be lucky enough to hit the jackpot or win big early on, others may save and wait for long periods for even a small return. It still pays to shop around for the best deal.
“While an increase to the rate of interest applied to the NS&I’s cash Junior ISA accounts is good news, more broadly, cash Junior Isas are frankly pointless other than as an option for teenagers approaching adulthood who might shortly need to use their pot and therefore want to remove the short-term risk of a sudden loss of value.
“Most Junior Isas are going to be inherently very long term, because they cannot be accessed until the child is 18, there is ample time for short-term bumps in stock markets to be ironed out.
“While stock markets can be volatile on a day-to-day basis, a glance at history shows that they have a knack of delivering inflation-beating returns over long periods of time.”
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