If you have one of the above accounts, you’ll already be benefitting from the rate increase. You can read more about the pros and cons of the various accounts in our article National Savings & Investments products explained. The interest rates on NS&I Guaranteed Growth Bonds, Guaranteed Income Bonds and Fixed Interest Savings Certificates will also increase, but not until August.
Laura Suter, head of personal finance at AJ Bell said: “It’s a real turnaround from two years ago, where NS&I slashed rates, causing an exodus of savers from its products. The new rates mean that the Direct Saver, Direct ISA and Income Bond accounts are paying the same or more interest than before those rate cuts in September 2020.
“Only Junior ISAs have failed to return to their former glory, paying 3.25% interest in 2020 and just 2.2% interest after the rate hikes.”
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, added: “The current rates aren’t market-leading, but they are within shooting distance of the best around, and they will appeal to plenty of savers.”
“The best easy access rates on the market elsewhere come with caveats. For example, to get the top rate of 1.6% from the Islamic bank Al Rayan you need to deposit a minimum of £5,000. For others you need to move your current account to the provider, or agree to only access your money a handful of times during the year. The best rate on the market with no strings attached, and available on £1 of savings is 1.5%. The NS&I rate isn’t far behind.”
“The Direct ISA, by contrast, is still a bit of a disappointment even after the rate rise. It remains well behind the market leaders, and when you can get 1.4% from Cynergy Bank with no strings attached, the gap may well be too big for even the most ardent NS&I fans.”