NS&I hikes interest rates

Another shot in the arm to savings rates, but it still pays to shop around for the best deal.

Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “NS&I savings rates have been given another shot in the arm following successive base rate increases. They represent marked increases, especially on the Direct Isa and Junior ISA, which bodes well for savers – but the rates are far from market-leading.

“It still pays to shop around for the best deal. There are very few places you can save at a higher rate than inflation, but you should still make your money work harder for you where you can.

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“The projected prize rate for Premium Bonds has also been pushed up - but that does not mean the average person will get the heightened rate on their savings. Premium Bonds can be fun lottery-style alternatives to easy access savings account and might tempt some savers hoping for good luck to bolster their wealth amid the largest fall in living standards in generations. But the fact remains that while some savers might be lucky enough to hit the jackpot or win big early on, others may save and wait for long periods for even a small return.

“Those who can afford to put money away for five years or more should consider investing for the potential of inflation-beating returns that far outstrip savings rates. Investing can be volatile on a day-to-day basis and while the potential for greater returns from the stock market comes with inevitable risk, taking a long-term view means you can smooth out some of those highs and lows while benefiting from the long-term potential that comes with this approach.”