NS&I Decreases Interest Rates Across 7 Savings Products - Comprehensive Overview of Alterations
NS&I Reduces Interest Rates on Savings Products
In a recent announcement, National Savings and Investments (NS&I) has reduced interest rates on several of its savings products, including the Junior ISA. The new interest rates will take effect from various dates, with the Junior ISA rate reduction coming into effect from 18 July.
The new interest rates for NS&I's two, three, and five-year growth bonds are 3.85%, 3.88%, and 3.84% respectively, down from their previous rates in April. The new issue for the five-year income bond pays 3.78% gross/3.84% AER, a decrease from 3.99% gross/4.06% AER. The Junior ISA interest rate has been reduced from 4% to 3.55%.
The table provided shows the new interest rates for various NS&I savings products, effective from 3 July 2025 (on general sale). The table includes the interest rates for Guaranteed Growth Bonds and Guaranteed Income Bonds with different terms (2-year, 3-year, and 5-year).
Compared to market-leading fixed-term savings accounts and fixed-rate cash ISAs, NS&I's fixed bonds are lower. For example, top 1-year fixed savings accounts on the market reach up to 4.6% with AlRayan Bank, significantly higher than NS&I's offerings.
However, NS&I remains a strong choice for those prioritizing security and government backing. The reduced interest rate for the Junior ISA, according to NS&I Retail Director Westhead, reflects NS&I's "ongoing commitment to helping young people save for their future."
It's worth noting that the minimum deposit for NS&I bonds is £500, with a maximum of £1 million per person per issue. The new issues of NS&I's two, three, and five-year British Savings Bonds are available, but with lower interest rates.
Meanwhile, other financial institutions such as Beverley Building Society and Loughborough Building Society offer a Junior ISA paying up to 4.15%, exceeding NS&I's new rate.
The table also shows the previous interest rates for the same NS&I savings products, effective from 15 April 2025, for comparison.
In summary, while market-leading fixed-term savings accounts and fixed-rate cash ISAs currently outperform NS&I’s fixed bonds by around 0.6% to 1.0% AER, especially on 1- to 3-year terms, NS&I remains a secure and government-backed option for savers.
- The reduced interest rates on National Savings and Investments (NS&I)'s savings products, such as the Junior ISA, will impact the returns for many savers.
- For those investing in bonds, NS&I offers savings instruments with lower interest rates compared to market-leading fixed-term savings accounts and fixed-rate cash ISAs, like the top 1-year fixed savings account with AlRayan Bank.
- Despite having lower interest rates, NS&I's savings products maintain their status as a strong choice due to security and government backing, as evidenced by the reduced interest rate for the Junior ISA.
- In the personal-finance industry, other financial institutions offer higher interest rates for savings products, such as the Junior ISA, with institutions like Beverley Building Society and Loughborough Building Society offering up to 4.15%.
