National Savings and Investments has finally increased rates on a number of its easy access and fixed rate savings accounts.

Direct Saver and Income Bonds now pay 1.8 per cent, down from 1.2 per cent, meaning better rates for around 600,000 savers.

In December 2021, they paid just 0.15 percent. Income bonds are popular with retirees because they pay income every month.

Interest rise: NS&I’s Direct Saver and Income Bonds now pay 1.8%, up from 1.2%, meaning better rates for around 600,000 savers

Around 346,000 Direct Isa holders also saw their rate rise to 1.75 per cent from 0.9 per cent. All three of these rate changes are effective immediately.

Anna Bowes of Savings Champion says: “This move means that NS&I is finally competitive on its easy-to-access Direct Saver and Income Bonds.”

For guaranteed-growth bonds, the annual rate will increase from 1.85 percent to 3.6 percent, a 175 basis point increase, the largest increase of all.

Its two-year, three-year and five-year deals will rise to 3.65 per cent, 3.7 per cent and 3.8 per cent respectively. Meanwhile, its guaranteed-income bonds will pay 3.5 percent for one year, up from 1.8 percent.

For the two-, three-, and five-year versions, the rates will be 3.55 percent, 3.6 percent, and 3.7 percent, respectively.

Finally, two-year fixed-rate savings certificates will rise to 3.4 percent from 2.15 percent, and the five-year version to 3.55 percent.

All of these new fixed rate increases will come into effect on December 1. However, none of these accounts are currently being sold to new customers.

Depositors who already have bonds can renew them when they mature. Those whose accounts expire before December 1 will be offered a lower rate.

Some 22.5 million premium bond holders also got a big boost after the prize pool increased to 2.2 percent this month.

The odds of winning have plummeted from 35,500-1 earlier this year to 24,000-1 now. Meanwhile, the £100,000 and £50,000 prizes up for grabs have almost doubled.

The moves come amid an increase in the Bank of England’s base rate from 0.1 percent in December 2021 to the current 2.25 percent in September. The rate is expected to be raised even higher when Bank of England officials meet next week and again in December.

Rising: Fixed-rate savings certificates will rise from 2.15% to 3.4%, and their five-year version to 3.55%

Rising: Fixed-rate savings certificates will rise from 2.15% to 3.4%, and their five-year version to 3.55%

However, there are now a number of easy-access savings accounts that pay more than 2 per cent, beating NS&I. And despite the improvements, NS&I’s million rates are still incredibly low.

About 1.5 million depositors in the NS&I Investment Account seen in the report had their rate hiked to a paltry 0.4 per cent yesterday from a dismal 0.01 per cent.

Ms Bowes adds: “Loyal investment account holders are still being treated very badly.”

Depositors languishing in these accounts are urged to move. The big appeal of NS&I is that all your savings are guaranteed by the government.

From banks and building societies, the maximum you can claim under the Financial Services Compensation Scheme if your supplier gets into trouble is £85,000, or £170,000 on joint accounts.

NS&I is aiming to raise £6bn (plus or minus £3bn) in the current financial year, which runs from 1 April 2022 to 31 March 2023.

Bank of England figures show NS&I has already raised £2.83bn in the first five months – and that’s before the Premium Bond prize pool increased from 1.4 per cent to 2.2 per cent this month, which may explain the slow movement to easy collection -access and fixed rates.

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