NS&I throws down the gauntlet with latest rate hikes
Move sends one-year fixed rate products to the top of the savings table.
30th August 2023 12:08
by Myron Jobson from interactive investor
Share on
Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “The latest round of rate hikes by NS&I is the cream of the crop. The government-backed bank now offers the most competitive one-year fixed rate savings accounts on the market in a move that throws down the gauntlet to high street banks.
“Savers would be wise to remember you cannot withdraw cash from these accounts before the end date without incurring a penalty - except in exceptional circumstances.
“The move is a real statement of intent by the NS&I amid persisting cost-of-living pressure, which have prevented many from saving. The announcement follows the latest Bank of England Money and Credit report, which revealed that households withdrew a net £100 million from NS&I accounts in July, following £200 million of net withdrawals in June.
“The rate hikes are also indicative of its efforts to meet its bumper net financing target of £7.5 billion for the current tax year - which is 25% more than its the £6 billion target for the previous tax year.
“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 outstrips 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.”
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.