UK savings: 5% interest rate deals may not last, say experts
Summary
The UK’s National Savings and Investments (NS&I) has raised interest rates on some of its savings bonds to over 5%, the highest in nearly three years. These bonds are backed by the government and allow large investments, but the fixed rates mean the money can’t be withdrawn early.Key Facts
- NS&I increased interest rates on “British savings bonds” to above 5% for one-, two-, three-, and five-year terms.
- The one-year bond rate is now 4.99%, the two-year 5.07%, the three-year 5.1%, and the five-year 5.17%.
- These “British savings bonds” are versions of NS&I’s guaranteed growth and income bonds, offering fixed interest paid yearly or monthly.
- Investors can put in up to £1 million per person in each bond issue, much higher than the typical £120,000 government guarantee at most banks.
- Money put in these bonds cannot be withdrawn until the end of the fixed term.
- Other high-interest savings options exist, such as Starling Bank’s Easy Saver account with a 5% interest rate on balances up to £25,000.
- Marcus by Goldman Sachs recently raised its one-year fixed-rate savings account interest from 4.3% to 4.75%.
- Higher interest rates have appeared due to increased competition among savings providers in the UK market.
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