NS&I addresses its interest rates after Bank of England hiked Base Rate four times

Martin Lewis predicts interest rates will continue to rise

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NS&I operates similarly to other banking and savings institutions, with the one primary difference being it is under the guidance and protection of HM Treasury. Because of this, NS&I may not be able to offer customers the same appealing interest rates, however savings options such as Premium Bonds still attract many savers.

Twitter user Mulletron60 contacted NS&I’s help page account on the social media platform, asking: “When are you going to raise the interest rate on Income Bonds?

“You’re lagging behind high street banks now by some margin; the base rate has been hiked four times.

“Your rates are pretty dismal so why should I keep money in Income Bonds?”

NS&I replied in a thread of five tweets, explaining just how their interest rates are decided.

They started: “Hi. As NS&I’s primary role is to provide safe borrowing to the government for public spending.

“We are given net targets by the Treasury – we may need to balance accounts accordingly to ensure we hit those targets.

“We may do this through a number of means, and one of them is through changes to our rates. 

“Due to our unique position, we also have to consider not only our savers, but the needs of the taxpayer, and the impact these changes may have on the broader UK financial sector.

“With these considerations in mind, we may not always update our rates at the same time as the Bank of England’s base rate does.

“But know we’re regularly reviewing our rates and will make recommendations to HM Treasury when we believe they are best suitable.

“We’ll always publish our latest rates on our website at http://nsandi.com/interest-rates. We’ll let our customers know of any rate decreases at least two months before they happen.”

Currently, the income bonds account with NS&I has a 0.50 percent interest rate. 

This account certainly doesn’t have the best interest rate on offer from NS&I, but it provides an easy access account with monthly interest payments, a rare find in the current savings market. 

Top of the interest rate offers from NS&I is the Junior ISA account. 

The Junior ISA is a tax-free savings account that parents can set up for their children up until they turn 18.

The account offers 1.5 percent interest, followed by Premium Bonds which offers a 1.40 percent prize rate instead of an interest rate. 

Premium Bonds do not provide a traditional interest rate but qualifying bonds are entered in a monthly prize draw.

The monthly prize draw offers the potential for savers to win between £25 and £1million. 

All of the prizes are tax-free but savers are warned that the lacking interest rate would mean if they don’t win anything their money will slowly be eroded by inflation over time. 

NS&I also offers Green Savings Bonds with a similar interest rate of 1.30 percent. 

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