This new product gives people access to a market-leading rate of 2.2% for between £100 and £3000 of their savings.
In a move to support savers who have been affected by low interest rates, the Chancellor announced the market-leading product at Autumn Statement 2016. The rate of 2.2%, fixed for three years, was confirmed at last month’s Budget.
Economic Secretary to the Treasury, Simon Kirby said:
From raising the ISA threshold to introducing the new Lifetime ISA, this government is committed to creating a nation of savers.
With its market-leading rate of 2.2%, the investment bond will provide a valuable boost for savers who have been affected by low interest rates.
With the average 3 year fixed term product having a rate of 1.24%, the new offering is significantly higher than others currently on the market.
In the decade before 2009, the average 1-year fixed term savings rate was 5.0%. But since then the average has been 1.9%, and is currently 0.6%.
The product is provided by NS&I, one of the largest savings organisations in the UK with 25 million customers, and is available to those aged 16 and over.
It can only be purchased online to give customers a simple way to apply for the bond and to manage their investment. This also reflects the changing nature of customer behaviour as more money is deposited online with NS&I than via any other individual sales channels.
The new NS&I product comes on top of other actions the government has taken to support savers, including increasing the ISA allowance to £20,000, introducing a new personal savings allowance that means that 98% of adults pay no savings tax and launching the Lifetime ISA to help younger people buy their first home and save for later in life.