New One-Year British Savings Bonds Introduced by NS&I: Examining Interest Rates in Comparison
In August 2023, National Savings & Investments (NS&I) launched a one-year fixed-rate bond with a rate of 6.2%, attracting 225,000 savers and £10 billion in investments. However, this new rate comes as a blow to those who took out NS&I's 5.15% one-year fixed rate bond last summer, which matures at the end of this month.
The new NS&I one-year fixed rate bond pays £2,090 in interest on a £50,000 balance in one year, while the top one-year fixed rate bond on the market pays 4.53%, netting you £2,265 on the same balance. On a £20,000 balance, a best-buy 4.53% rate would net you £906 in interest in one year, compared to £836 with NS&I's bond.
While NS&I has not confirmed whether it will unveil another exclusive one-year deal for these savers, there are one-year fixed deals available elsewhere paying more than 4.18%, the rate offered by the latest NS&I issue. The new rates are higher than the previous issues of the bonds, which paid 4.05%.
Among the top commercial banks, Castle Community Bank offers the highest one-year fixed rate of 4.59%, slightly outperforming NS&I’s 4.18% AER for its one-year fixed-rate bond. GB Bank follows closely with a rate of 4.58%.
Here's a comparison of the best one-year fixed savings rates currently available in the UK market:
| Provider | Rate (AER) | Minimum Deposit | Notes | |----------------------------------|------------|-----------------|-----------------------------------| | Castle Community Bank Fixed Rate Savings | 4.59% | £1,000 | Interest paid at maturity | | GB Bank 1 Year Fixed Rate Bond | 4.58% | £1,000 | Interest paid at maturity | | StreamBank Fixed Rate Account | 4.52% | £1,000 | FSCS protection up to £85,000 | | Tandem Bank 1 Year Fixed Saver | 4.52% | £1,000 | Similar terms | | NS&I 1-Year Fixed Rate Bond (Issue 85) | 4.18% | £500 | Government backed, fixed 1 year |
NS&I bonds have the advantage of government backing, offering strong security, but the rates are slightly lower than some high street or challenger banks’ offers. The best accounts typically require a minimum deposit of £1,000, whereas NS&I requires £500 minimum.
In summary, if your priority is the highest fixed interest rate for one year, Castle Community Bank and GB Bank slightly outperform NS&I’s new one-year fixed bond. However, if you prioritize government-backed security, NS&I remains a solid although slightly lower-paying option.
Sources: [1][2][5]
[1] NS&I has a net financing target of £12 billion within a range of plus or minus £4 billion for the financial year 2025/26.
- The new NS&I one-year fixed rate bond, despite offering a higher rate than previous issues, doesn't match the top one-year fixed rates available from commercial banks like Castle Community Bank and GB Bank.
- On a £50,000 balance, the best one-year fixed rate bond on the market provides £2,265 in interest over a year, higher than the £2,090 earned from NS&I's new one-year fixed rate bond.
- If you prioritize the highest fixed interest rate for one year, Castle Community Bank and GB Bank slightly outperform NS&I’s new one-year fixed bond, but NS&I remains a government-backed, secure option.
- When it comes to personal finance, investing in a one-year fixed-rate bond, whether from NS&I or a commercial bank, can help grow your savings, with the best accounts typically requiring a minimum deposit of £1,000, except for NS&I which requires only £500.
