Budget 2017: details of new NS&I three-year savings bond confirmed

8 March 2017

Today Philip Hammond confirmed that the new National Savings and Investments (NS&I) bond, which will have a three-year term, will offer an interest rate of 2.2%.

The maximum investment limit, however, is low at £3,000. Savers who invest the full amount will pocket £66 a year before tax.

The investment limit of £3,000 is not exactly going to make a huge difference to people who can already get 2.2% on a three-year savings product with Atom Bank and 2% with Secure Trust Bank. It’s not as “market-leading” as the Chancellor indicated that it would be in the Autumn Statement, when the top rate on a three-year bond was 1.2%.

The real question is whether it’s a good idea to tie your cash up for this long. With rates on fixed savings accounts starting to nudge upwards you could end up selling yourself short by committing to a three year product. 


Mr Hammond had previously announced in the Autumn Statement that the bonds will be open to everyone aged 16 or over.

The bond will be subject to a minimum investment limit of £100 and will be available for 12 months from April 2017.

It is unclear at this stage how many bonds NS&I will be able to sell. But in the Autumn Statement, Mr Hammond seemed to suggest there shouldn’t be problems on the supply side, stating that he “expects around two million people to benefit”.

The new bond brings at least some positive cheer to the savings market and sets a benchmark for other providers to meet.

With the spectre of inflation returning in 2017 and predicted to hit 4% towards the end of next year, the landscape is going to become even tougher for savers. If you have large amounts of cash savings or cash Isas, you may be thinking about investing for higher income, in which case read Are you ready to switch to an investment Isa? 

Anna Bowes, director of SavingsChampion says: “It’s welcome news that the new NS&I bond will be launched in April but disappointing that the rate is not higher, given the improvements in the wider market in the time since the bonds were originally announced, in the Autumn statement last year.
"Of course, any better paying accounts in the current climate is good thing and with the positive movements we’ve been seeing in the savings market in recent months, we wouldn’t be surprised if more challengers banks quickly catch up and beat the rate on offer from the NS&I bond."


Add new comment