National Savings & Investments (NS&I) has recently increased the interest rate on its Green Savings Bonds from 4.2% to 5.7%.
You can get this rate if you’re willing to lock your money away for three years and can deposit at least £100 (the maximum limit is £100,000).
What are NS&I’s Green Savings Bonds?
NS&I’s Green Savings Bonds, an online-only account that first went on sale in October 2021 with a rate of 0.65%, are ideal if you’re interested in environmentally friendly investments.
Money invested in these bonds will go towards green projects chosen by the government that’ll focus on making transport greener, using more renewable energy, preventing pollution and more.
You’ll also get details about how the funds are spent and the environmental benefits.
Since NS&I’s Green Savings Bonds went on sale nearly two years ago, over £915 million has been invested in them.
Do the Green Savings Bonds offer the best rate?
NS&I’s Green Savings Bonds don’t offer the best rate. However, it’s not far off the market-leading three-year bond offering 6% at the time of writing.
After a slow initial take-up, the interest rate on this bond has soared since its launch due to the continual rise in rates.
“Green Bonds haven’t flourished quite the way that the government may have wanted,” said Mark Hicks, head of savings at Hargreaves Lansdown.
“It’s a decent rate, but for those keen to seek out the most competitive deals on the market, it falls short.”
According to AJ Bell, savers will sacrifice around £35 of interest a year by choosing NS&I over the most competitive three-year bond.
“Anyone who recently bought the bonds might have time to switch out and get a better rate,” commented Laura Suter, head of personal finance at AJ Bell.
“The bond has an initial 30-day cooling off period, where people can get their money back, but once savers are past that point, they are locked in for three years.”
Some experts believe savings rates have peaked, so a fixed-rate account might be worth considering.
If you’re unsure what to do with your savings, an independent financial adviser can help you find the best account based on your circumstances and goals.