NS&I offers boosted three percent interest with Green Savings Bonds
The product previously had an interest rate of 1.3 percent, with the rate increased with the third release of the Bonds. Savings analysts welcomed the improved three percent rate on the Bonds, making the product more competitive.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said the move has pushed NS&I “within shouting distance” of the most competitive three year rates.
She said: “It gives the green light to new savers who want to tie their money up for three years and prioritise green credentials above the rate.
“New savers could see this as a green light to get stuck into ethical savings. However, it’s worth thinking carefully before you do – so you don’t succumb to the green-eyed monster during the term.
“Three years may not be the most rewarding period to fix for. Right now you’re not getting paid an enormous premium for fixing for longer – because the swaps market influences the rates on offer, and the swaps market thinks that rates will rise in the short term and fall back later.”
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“Savers who are green-minded can invest in the new three percent Bond Issue, fixed over three years and at the same time, they also benefit from a 100 percent guarantee from HM Treasury on their investment.”
Savers get a cooling off period in the first 30 days of investment if they change their mind about the product.
A person must invest in at least £100 of Bonds with a maximum limit of £10,000 per person per issue.
Those who have invested in the second and third issue can also invest in the latest, third issue of Bonds.
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The interest is taxable when paid at maturity and will count towards the customer’s Personal Savings Allowance.
Richard Fuller, Economic Secretary to the Treasury, said: “By increasing the returns on Green Saving Bonds to three percent we are demonstrating our commitment to green infrastructure in the UK.
“This will drive investment in projects to tackle climate change, improve sustainability and increase renewable energy capacity.”
If a person opened an account with £10,000, their savings would grow to £10,940 in three years.
The Bonds launched last year, with an initial rate of just 0.65 percent over the three years.
Data obtained from a Freedom of Information request by This is Money found that £102million was deposited into the bonds during the first four months at this rate.
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