Savings giant NS&I has put new issues of its British Savings Bonds on sale with higher rates.
British Savings Bonds are fixed-term issues of NS&I’s Guaranteed Growth Bonds and Guaranteed Income Bonds.
They are available to new customers and people with existing bonds that are due to mature.
NS&I said the rate increases reflect changes in the wider market and will help it to meet its net financing target while continuing to balance the interests of savers, taxpayers and the broader financial services sector.
The savings provider is backed by the Treasury, meaning money held with it has 100% security.
The new interest rate on one-year options for the bonds is 4.50% AER (annual equivalent rate), up from 4.07% previously.
For two-year options, the new rate is 4.48% AER, increased from 3.98%.
The new interest rate on the three-year option is 4.45% AER, up from 4.02%.
And for the five-year option, the new rate is 4.40% AER, increased from 4.05%.
British Savings Bonds are available to customers wanting a guaranteed interest rate for a fixed term and funds cannot be withdrawn early.
Savers will need a minimum investment of £500 and can invest a maximum of £1 million per person in each issue. After the fixed-term period, savers will have the choice to withdraw their cash or reinvest it into a new term.
In addition, the interest rate for NS&I’s postal-only Investment Account has increased to 2.05% AER, from 1.00%.
The conflict in the Middle East has caused volatility in financial markets and prompted expectations that interest rates could remain higher for longer than previously expected. The Bank of England’s next base rate decision is on Thursday.
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Many providers have recently been launching new savings deals, with “Isa season” having been underway as the new tax year started in April. It is a time of year when competition in the market traditionally heats up.
Rachel Springall, a finance expert at Moneyfactscompare.co.uk said: “NS&I are popular because they are a trusted brand and provide 100% capital security, so these bonds may appeal to savers with big pots who are happy to forgo higher interest rates available elsewhere.
“Savers who are enticed by the longer-term offerings from NS&I would be wise to shop around as there are many alternative bonds paying higher rates.
“This includes fixed returns from building societies, such the market-leading five-year bond from Market Harborough Building Society paying 4.70%.”
She added: “Some savers hit by fiscal drag may instead want to shield their hard-earned cash from tax, so a fixed rate cash Isa would be a good alternative to a fixed bond. As it stands, Skipton Building Society are paying a market-leading rate of 4.55% on a short-term fixed Isa, fixed for 18 months.”
In March, it emerged that NS&I is preparing to pay out hundreds of millions of pounds after failures meant that bereaved families were missing out on savings pots.
NS&I notified the Treasury in December of an operational failure to trace accounts comprehensively of some customers who had died.
The savings provider has apologised and said previously in a statement that “the issue has been resolved for current and new bereavement claims and robust measures have been introduced to ensure this does not happen again”.
Sarah Coles, head of personal finance at AJ Bell, said of NS&I’s new British Savings Bond rates: “The one-year deal is particularly strong, and given that savers are far more likely to fix for one year than any other period, NS&I is clearly working harder to attract more cash.
“It’s not a major surprise, given how rates have been rising elsewhere. NS&I has a duty to offer decent value for savers, so it couldn’t reasonably sit on its hands offering just a fraction over 4%.”
Ms Coles said that with NS&I having faced “its share of bad news in 2026” and having “a fairly punchy funding target”, it has “clearly decided that it needs to do something bold to start the year strong”.
She added: “Savers can still do better in several accounts elsewhere, so anyone hunting for the best possible deal won’t be tempted by the changes.
“However, for those attached to the brand or drawn by the appeal of the 100% Treasury guarantee, the rate boost may be enough to tip the balance.”