Savings update: pensioner bonds trump all else

Savings update: pensioner bonds trump all else

National Savings & Investments (NS&I) bonds for those age 65 and over will pay 2.8% before tax (2.24% after) for one year and 4% (3.2%) for three years. They go on sale in January - the exact date is still to be announced.

The rates are far higher than the best rates available from banks and building societies. The top rate on one-year deals is currently 1.85% (1.48%) from internet bank FirstSave. That means older savers can get an extra £95 interest on the full £10,000 entitlement on the NS&I bond.

For three years the best deal is 2.51% (2%) from Secure Trust. Compared with this current best buy the NS&I bonds would generate an extra £447 in interest over the term.

But you will not see any interest on the NS&I bonds until the end of the term. Minimum investment is £500 and the maximum £10,000 per bond.

On easy-access accounts the best rate is 1.4% (1.12%) from ICICI Bank, AA Savings, Post Office and Tesco Bank. All bar ICICI Bank come include bonus interest which only lasts for 12 months.

Find the best Cash Isa or savings account for you

Cash Isas

On tax-free cash Isas National Savings & Investments pays 1.5% with no short-term bonus, but you cannot transfer your existing cash Isas into the account. Best for transfers is Barclays Bank at 1.49% on a minimum £30,000 with no bonus.

Post Office pays a higher 1.55% on its Premier Isa which includes a bonus of 0.8 percentage point bonus for 18 months. On fixed-rate cash Isas Post Office pays 1.7% for one year while AA Savings pays 2% for two years.

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