Savings rates cut on Growth and Income Bonds

National Savings & Investments (NS&I) has reduced the interest rate it pays on Guaranteed Growth and Income Bonds for new customers.

Interest on the 3-year Growth Bond has been reduced from 2.2% to 1.95%, while interest was also lowered from 2.15% to 1.9% for the 3-year Income Bond with effect from 6 March 2018.

However, the rate on the 1-year version of both bonds has remained unchanged.

Guaranteed Growth and Guaranteed Income Bond accounts can be opened online, and offer a guaranteed return on a minimum investment of £500 and a maximum of £1 million.

According to NS&I, the bonds had been popular since their launch in December 2017, and this high demand has led to the decision to reduce interest rates.

The changes will only apply to new customers, so those who already hold a 3-year Growth or Income Bond that was opened before the rates changed will not be affected.

Meanwhile, savers under 18 could see improved rates, as NS&I has increased the interest rate on its Junior ISA to 2.5%.

Jill Waters, retail director at NS&I, said:

"It is always a difficult decision to reduce rates but these changes will allow us to manage demand in order to achieve our net financing target, while continuing to deliver positive value to taxpayers.

"The new rates present a fair offer, and customers continue to benefit from a high holding limit and 100% security on all deposits."

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