NS&I ups interest rates across variable products
State-owned savings bank throws down the gauntlet to high street banks as it passes on rate rise.
8th August 2023 10:35
by Myron Jobson from interactive investor
Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “Being government-backed, the NS&I is attempting to lead by example by passing on the recent base rate rise to savers. This follows the recent launch of a 14-point action plan by the City watchdog to ensure that banks are passing on the best savings rates to their customers.
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“The NS&I has notably passed on the 0.25% rise in the base rate, and then some, to three of its variable rate products, in a move that throws down the gauntlet to high street banks. It bodes well for savers – but the rates are not market-leading, so it still pays to shop around for the best deal.
“The Premium Bonds prize fund rate will hit a 24-year high from next month - 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 an easy-access savings account and might tempt some savers hoping for good luck to bolster their wealth amid the cost-of-living crisis. 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 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.”
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