Savers with larger deposits will be unhappy that NS&I has slashed the ceiling on its deposits.
The change relates to NS&I’s one- and three-year guaranteed growth and income bonds. Previously, savers were able to deposit up to £1 million with these products. Now however, NS&I have slashed this limit to just £10,000. This is effective immediately.
Jill Waters, retail director at NS&I, explains why: “Guaranteed Growth Bonds and Guaranteed Income Bonds have been on sale since 1 December 2017 and have proven extremely popular.
“We are pleased to have given savers over six months to invest larger amounts, but these changes to the investment limit will allow us to manage demand in order to achieve our net financing target for 2018-19, while continuing to deliver positive value to taxpayers.
“The interest rates on both Guaranteed Growth Bonds and Guaranteed Income Bonds will remain unchanged and present a fair offer to savers. Customers who have invested previously will be able to renew existing investments at maturity at the purchase limit they purchased at. As with all our products and investments, NS&I offers 100% security on all deposits.”
However, Sarah Coles, personal finance analyst at, Hargreaves Lansdown, highlights a major drawback. She says: “Savers with a lot of cash loved these products because they could save up to £1 million in each, with a government-backed guarantee. If they are to save elsewhere, the first £85,000 is protected by the Financial Services Compensation Scheme. But if they have more than this, they need to spread their money around.
Those savers who already have one of these products will not be affected by the new deposit limits if they roll over their initial deposits.
Ms Coles adds: “There’s a stay of execution for existing NS&I savers because if they roll their money into these bonds at maturity, they’ll get a £1 million limit.”
See the table below for the new selection of one and three-year bonds from NS&I:
|Product||New issue||Maximum purchase limit||Effective from|
|Guaranteed Growth Bonds, one-year term (Issue 63)||1.50% gross/AER guaranteed for one year||£10,000||11 June 2018|
|Guaranteed Growth Bonds, three-year term (Issue 58)||1.95% gross/AER, guaranteed for three years||£10,000||11 June 2018|
|Guaranteed Income Bonds, one-year term (Issue 63)||1.45% gross/1.46% AER, guaranteed for one year||£10,000||11 June 2018|
|Guaranteed Income Bonds, 3-year term (Issue 58)||1.90% gross/1.92% AER, guaranteed for three years||£10,000||11 June 2018|
Source: NS&I, June 2018
These accounts do not, however, represent the best rates available on the market. Currently, the market-leading rate on one-year bonds is offered by Atom Bank with a rate of 2.05%. The maximum deposit of £100,000 is much higher than the new NS&I limit.
The best three-year bond is currently offered by RCI Bank with a rate of 2.31%. This has an even more generous deposit limit of £1 million. However, note RCI Bank is French-based and therefore your money is protected by the French rather than the UK deposit protection scheme.