The Guardian has reported this morning that:
The UK government's savings bank, NS&I, has “thrown down the gauntlet” to high street rivals by launching a one-year fixed-rate savings account paying a table-topping 6.2%.
These new rates – available to new and existing customers – are the highest ever offered for these products since they first went on sale in 2008, and mean NS&I has overtaken challenger banks and others to take the top spot in the savings best-buy table for one-year fixed-rate deals.
They added:
Commentators said NS&I was likely to experience strong demand from savers keen for a decent return, as it means they get to secure a record rate that comes with a 100% Treasury guarantee.
I agree with those commentators: this is going to shake up the savings market, and rightly so.
It is long overdue that the government was an active player in the savings arena, making clear that what it borrows is simply a savings arrangement that can be of benefit to society and nothing like the burden it is claimed to be, at all.
I just hope this continues.
More than that: I hope the government makes clear the social value of doing this.
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Good news.
Every pound moved to NS&I means the BoE pays less interest to commercial banks on their reserve accounts.
Better to pay individuals that interest directly than have banks take a cut.
Now, all we need are some ideas about taxing investment/’unearned’ income more fairly….. I wonder where ideas on this might be coming from!!??
🙂
Another section finished and two edited yesterday….
Sounds great, except the website seems not to want new customers. I cannot find out how to open an account!
You have to register first, and that takes time, I admit
Looks very interesting, I’m not sure how the government will be able to square this with their mantra about debt reduction
6.2% interest rates on savings are nice, but I assume this is only because base interest rates are high.
Can base interest rates be reduce near to zero, yet interest on savings be maintained?
It is
But the point that NS&I should be a amrket leader whatever the rates is the one I was really making.
Good news if inflation stays below 6.2% but if not because of global food crisis due to climate, rising rents and mortgages due to the housing crisis, it may not seem so pretty in a years time.
This is very interesting – I wonder what the minimum deposit is? And what might might it be invested in?
I do not think there is a minimum.
Th money is part of so-called government debt.
Minimum is £500, then multipliers of £500.
“Minimum is £500, then multipliers of £500. ”
So not aimed at people on lower income.
This needs to improve
In the 1950s most of my infants class, once a week, would turn up with their savings book and 6d to buy another stamp to put in it.
Was that the National Savings Bank and whatever happened to the scheme?
TSB, I suspect.
Yorkshire Penny Bank was the savings scheme at my primary school. That was early sixties. There may of course have been other banks doing the same thing. I wouldn’t know.
My school used the East Anglian TSB.
By the time I was in the sixth form I had saved more than £20 and thought I was rich.
Interestingly, this NS&I 1-year guaranteed growth bond is available to private pension funds, such some SIPPs. I think it is very attractive – no IFA like me can ‘guarantee’ a return of 6.20% gross (no tax deducted in a SIPP) from the equity and bond markets over that (or any) time period. But ‘vested interests’ from those adding layers of fees to their client’s money will argue against me.
A good step forward. I believe the minimum deposit is £500.
Alternatively you can invest upwards of £100 in Green Savings Bonds, but get only 5.7% and you have to leave your money there for 3 years.
The only way you can add to either is by buying more bonds, but that assumes they will remain available.
Is the Green Bond such an attractive deal compared to the 6.2% one year bond, especially for lower income people?
Note: “All money invested in NS&I is passed onto HM Treasury and contributes towards government spending. Money invested in Green Savings Bonds will also go to HM Treasury and be held in a general account. HM Treasury then plans to allocate an amount equivalent to the proceeds raised from Green Savings Bonds, to its chosen green projects, within two years.”
https://www.nsandi.com/green-saving
By “contributes towards government spending”, they mean makes a contribution to the Treasury’s arbitrary full funding rule.
And why wait two years to invest in green projects?
Good question