NS&I hikes interest rates to highest level in DECADE, with more than 2.7m depositors getting a boost: but how does it stack up against other banks?

  • NS&I is raising rates on Direct Saver, Income Bonds, Direct Isa and Junior Isa
  • Direct Saver and Income Bond rates are now at their highest levels for more than a decade
  • Meanwhile, the Direct Isa deal was raised from 0.9% to 1.75%
  • We look at how NS&I’s new rates compare to the rest of the market

The products featured in this article have been independently selected by This is Money’s specialist journalists. When you open an account using links that have an asterisk, This is Money will earn an affiliate commission. We do not allow this to affect our editorial independence.

More than 2.7 million savers will immediately see their rates rise after National Savings and Investments raised interest rates on a number of its popular accounts.

To date, the Treasury-backed bank has increased rates on its Direct Saver, Income Bonds, Direct Isa and Junior Isa.

The interest rate paid on Direct Saver and Income Bonds is now the highest it has been in ten years.

Rate rise: More than 2.7 million depositors to benefit as NS&I increases interest rates across product range

It follows NS&I’s decision last month to increase the Premium Bonds prize pool rate from 1.4 per cent to 2.2 per cent, improving the odds of winning from 24,500 to 1 to 24,000 to 1 and adding an extra £79 million to the prize pool for October

The Direct screensaver and Income bonds grew by 0.6 percentage points from 1.2 percent to 1.8 percent. Both of these accounts allow depositors to freely withdraw cash whenever they wish.

Someone who keeps £10,000 in any account can expect to earn £180 in one year – subject to further rate changes.

Meanwhile, Direct Deal Isa was raised from 0.9 percent to 1.75 percent and Junior Isa account increased from 2.2% to 2.7%.

In addition, effective December 1, 2022, NS&I will increase the interest rates payable on Bonds with guaranteed growth, Bonds with guaranteed income and Fixed interest savings certificates.

For example, the one-year bond will increase from 1.85 percent to 3.6 percent, and the two-year bond will increase from 2.25 percent to 3.65 percent.

However, the new tariffs for these products will only be available to existing customers with an investment repayment as they are not currently on sale.

Better odds: NS&I announced last month that the premium bond prize fund rate would rise from 1.4 percent to 2.20 percent, and odds would change from 24,500 to 1 to 24,000 to 1

Better odds: NS&I announced last month that the premium bond prize fund rate would rise from 1.4 percent to 2.20 percent, and odds would change from 24,500 to 1 to 24,000 to 1

Ian Ackerley, chief executive of NS&I, said: “Today’s boost to our variable and fixed rate products means our customers are getting the boost they want in their savings.

“The changes took place in the same month when we increased the rate of the Premium Bonds prize pool. Some of the rates we are currently paying, including on Premium Bonds, are the highest they have been in ten years, which is great news for investors.

“The interest rate changes we’ve announced today will help ensure our products are priced appropriately compared to those offered by our competitors.”

How does NS&I compare to the wider market?

Under easy access deals, the 1.8 per cent NS&I Direct Saver and Income Bonds are well ahead of the market average rate of 1.11 per cent, according to the latest Moneyfacts figures.

However, they fall far short of the leading offerings in our market independent best buy easily accessible league table.

Al Rayan Bank currently paying 2.81 percent, Gatehouse Bank pay 2.8 percent, while Sainsbury’s Bank pay 2.75 percent.

NS&I’s 1.75 per cent Easy Cash Isa also falls short of the highest rates on our independent best buy cash table Isa.

Coventry Building Society is a closely watched market leader paying 2.25 percent Cynergy Bank and Skipton Building Society pay 2.15 percent and 2.1 percent, respectively.

NS&I’s fixed-rate bonds don’t go into effect until December 1, and rates have been rising at such a pace in recent months that it’s hard to predict how much the best deals will pay by then.

At the beginning of September, the average annual rate was 2.33 percent. Now the average rate is 3.16 percent. During that time, two-year fixes also moved from 2.51 percent to 3.53 percent.

However, currently NS&I growth bonds, which pay between 3.6 and 3.8 percent, are significantly lower than the leading deals in our market. best buy fixed rate table.

The best annual fixed deals pay 4.5 percent Gatehouse Bank* and Shawbrook Bank. There are now three providers that pay 5 percent or more on long-term fixed-rate deals.

NS&I’s most competitive deal is arguably its Junior cash Isa. The 2.7 percent rate puts it among the 11 best deals currently available, according to our best buy Junior Isa.