Interactive Investor

NS&I throws down the gauntlet with latest rate hikes

Move sends one-year fixed rate products to the top of the savings table.

30th August 2023 12:08

by Myron Jobson from interactive investor

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Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “The latest round of rate hikes by NS&I is the cream of the crop. The government-backed bank now offers the most competitive one-year fixed rate savings accounts on the market in a move that throws down the gauntlet to high street banks.

“Savers would be wise to remember you cannot withdraw cash from these accounts before the end date without incurring a penalty - except in exceptional circumstances.

“The move is a real statement of intent by the NS&I amid persisting cost-of-living pressure, which have prevented many from saving. The announcement follows the latest Bank of England Money and Credit report, which revealed that households withdrew a net £100 million from NS&I accounts in July, following £200 million of net withdrawals in June.

“The rate hikes are also indicative of its efforts to meet its bumper net financing target of £7.5 billion for the current tax year - which is 25% more than its the £6 billion target for the previous tax year.

“Those who can afford to put money away for five years or more should consider investing for the potential of inflation-beating returns that far outstrips savings rates. Investing can be volatile on a day-to-day basis and while the potential for greater returns from the stock market comes with inevitable risk, taking a long-term view means you can smooth out some of those highs and lows while benefiting from the long-term potential that comes with this approach.”

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