NS&I cuts green savings bonds to 2.95%

  • NS&I cuts three-year green savings bonds to 2.95%
  • The previous issue paid 3.95% in November and 5.7% in August
  • The rate dropped by a whopping 48% in just five months

The National Savings and Investments Authority has again cut the interest rate on three-year fixed green savings bonds, this time to 2.95 per cent from 3.95 per cent in the latest sign that savings deals are heading south.

The account saw a significant decline from 5.7 percent in August 2023, when a new version is launchedIt has now reached 2.95 percent, a decrease of 48 percent in just three months.

Price has been cut from 5.7 percent to 3.95 percent in November.

This means a saver who opens the latest version of the account and puts in £10,000 will earn £321 less in interest over the three years than if they had opened the previous version launched in November – and £899 less than the August version.

Reduced: NS&I cut the interest rate on three-year fixed-rate green savings bonds to 2.95%, down from 3.95% in November 2023 and 5.7% in August 2023.

Reduced: NS&I cut the interest rate on three-year fixed-rate green savings bonds to 2.95%, down from 3.95% in November 2023 and 5.7% in August 2023.

The new rate is significantly lower than the current top provider of three-year bonds – which is from Access Bank and pays 4.6 per cent.

A saver who placed £10,000 in this account would have earned £1,444 in interest when the bond reached maturity.

Savers can also still get more than 5 per cent on one-year fixes – including a 5.16 per cent best buy from Smartsave Bank.

When green savings bonds were introduced in October 2021, they paid just 0.65 per cent.

This calculation was criticized by experts who said that the rate was too low and that the repair duration was relatively appropriate.

The second issue, four months later, offered 1.3 percent interest, which was then raised to 3 percent in August 2022.

In February 2023, another rise brought it to 4.2% before rising to 5.7 in August 2023. The rate has fallen once since then to today’s low.

Changes in green savings bond prices

First issue – October 2021: 0.65%

Second issue – February 2022: 1.3%

Issue 3 – August 2022: 3%

Fourth Edition – February 2023: 4.2%

Issue 5 – August 2023: 5.7%

Issue 6 – November 2023: 3.95%

Seventh issue – January 2024: 2.95%

The minimum investment in Green Savings Bonds is £100 and a maximum of £100,000 per person per issue.

On the maximum balance of £100,000, the interest over three years – before tax – would be around £9,241.

At a rate of 5.7 per cent between August and November 2023, £100,000 would earn £18,601 in interest.

Interest worked out using This is the lump sum savings calculator.

NS&I says the money is saved in bond financing projects such as making transportation greener, using renewable energy over fossil fuels, preventing pollution, using energy more efficiently, protecting natural resources and adapting to a changing climate.

Investors must be 16 or older to purchase NS&I Green Savings Bonds.

Unlike some NS&I products, these green bonds are also not tax-exempt.

“The interest you earn on green savings bonds will count toward your taxable income in the tax year in which your bonds mature,” NS&I says.

“They were always likely to face the business end of a pair of scissors as the savings market gradually moved south,” says Sarah Coles, of Hargreaves Lansdowne.

“However, the decision to cut so quickly and aggressively is disappointing. It raises the question of whether we will see growth in green savings, or whether the hard plum has done too much damage.”

(tags for translation) Daily Mail

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