Savings giant NS&I has launched new versions of its one-year British Savings Bonds with increased interest rates.
One finance expert described the move as bucking “the trend in a falling market”.
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 those with existing bonds which are due to mature.
The new rate for the one-year Growth and Income options, on sale from Thursday, is 4.18% AER (annual equivalent rate).
The previous rate was 4.05% AER.
Andrew Westhead, NS&I retail director, said: “I am pleased that we can offer savers – both new and those with our existing one-year bonds which are about to mature – this new opportunity to save.
“In launching this new issue, NS&I continues to balance the interests of its savers, taxpayers and the broader financial services sector – and to work towards its annual net financing target.”
NS&I is backed by the Treasury, so money held with it has 100% security.
Guaranteed Growth Bonds and Guaranteed Income Bonds are available to customers wanting a guaranteed rate for a fixed-term of one, two, three or five years.
Funds cannot be withdrawn early with fixed-term accounts. Savers 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 have the choice to withdraw their cash or reinvest into a new term.
Guaranteed Growth Bonds are a lump sum investment that earns a fixed rate of interest over a set period. Interest is added to the bond on each anniversary of the investment.
Guaranteed Income Bonds are a lump sum investment that pays out monthly income at a fixed rate of interest over a set period.
Earlier in July, NS&I launched some new versions of its two, three and five-year British Savings Bonds with lower rates than previously offered.
It also also lowered the rate on a Junior Isa from July 18, from 4.00% to 3.55%.
Many commentators expect the Bank of England base rate to be cut further this year, which could be a further blow to savers.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “NS&I has bucked the trend in a falling market and boosted the rate on its one-year bonds.
“Elsewhere, savings have been gradually dropping across the board. Fixed terms have generally held up slightly better than easy access accounts, but they’re still trending downwards.
“NS&I itself cut the rate on its bonds fixed for two, three and five years earlier this month – along with cuts to the Premium Bond prize rate in August.
