By Kate Brown
National Savings and Investments (NS&I) will cut the interest rate paid to investors who buy Guaranteed Growth and Income Bonds. Under the previous issue the three-year Growth Bond paid 2.2%. However, from 13 March 2018 only 1.95% will be paid. Only those who are new savers will be affected by these changes. Those who already hold the three-year Growth Bond and Income Bond will remain unchanged. The rate on the one-year version of both products will remain the same.
NS&I announced that the three-year Growth Bond had proven extremely popular since its launch in December. At that time, they were positioned at the top of the best buy tables but have now been overtaken by other savings products. This cut in rates is in contrast to some banks and building societies who have been increasing their savings rates slowly. NS&I however is set a specific fund-raising target by the Treasury which was reduced in the Autumn Budget to £8bn.
Retail director of NS&I, Jill Waters, stated “the demand for the bonds in the first three months has been high” and “these changes will allow us to manage demand in order to achieve our net financing target, while contributing to deliver positive value to taxpayers”.
Director of the website Savings Champion, Anna Bowes, said the changes were expected due to it being at such a competitive rate. However, savers can find better returns elsewhere with the Swedish Bank Ikano currently offering 2.26% on a three-year bond and Vanquis Bank currently offering 2.25%.