NS&I ups savings rates

Nothing to shout about, but these rises will hopefully spark a reprieve in rates more broadly, says interactive investor. 

Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “The new bumper rates are in line with the Bank of England’s base rate, nothing more. While they are nothing to shout about, it is good form from the Treasury-backed bank as many others have appeared uninterested in raising theirs from ultra-low levels.

“NS&I was widely viewed as the last bastion of competitive savings rates in the UK amid the era of rock-bottom interest rates, before cutting its rates sharply in November 2020 to low levels offered by high street banks – losing fans in the process.

“The hope now is that many banks will feel pressured to follow suit. Whether this will come to fruition remains to be seen. The rate offered by NS&I's Direct Saver account is better than the equivalent offered by high street banks, but below the current easy-access best buys.

“While the high rate of inflation means that most people’s savings are effectively losing value, it still pays to shop around for the best deal. 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.”

Key points

• NS&I has increased the interest rates on its Direct Saver and Income Bonds to 0.50% from today (10 February)
• The interest rate on both Direct Saver and Income Bonds has increased by 15 basis points.