SYLVIA MORRIS: The NS&I deal I’m going to take now… and the useless stuff I’m going to throw away!

National Savings & Investments boosted savers’ chances of winning the Premium Bond prize this summer, raising its prize fund rate to 4 percent—the highest level since 2007.

The odds of winning the monthly prize have been shortened to one in 22,000: the best in almost 15 years. The £100,000 prize pool increased by six to 77 this month, while the £50,000 prize pool went from 13 to 154. It is thought there will be 1,875,589 prizes of £50 and £100 respectively.

NS&I also increased its prize fund rate in August, for the fifth time this year. It’s running hot after this month’s hike, as the NS&I finally catches up with a rate hike. But not all savers will make it to the top.

In the quarter of a century I’ve written about savings for Money Mail, we’ve said goodbye to a time when savings providers offered a variety of simple accounts and we’ve been eclipsed by the marketing folks who introduced complicated schemes with reams of terms and conditions.

Through decades of financial instability, the NS&I has been considered the national treasure of our country. I remember back in the 1980’s when his Investment Account was among the highest payers. I even opened it myself.

Improvement: The premium bond reward rate will increase for the second month in a row from 3.7% in July to 4% in August.  An additional £30 million prize pool is up for grabs

Improvement: The premium bond reward rate will increase for the second month in a row from 3.7% in July to 4% in August. An additional £30 million prize pool is up for grabs

Like many savvy savers, I abandoned mine when better rates became available with online accounts.

But NS&I has always maintained an advantage over other savings providers. As part of the Government, it guarantees that all your hard earned money is safe.

Other providers can only offer a maximum of £85,000 per person under the Financial Services Compensation Scheme if they go bankrupt.

Since Premium Bonds launched in November 1956, it has distributed hundreds of thousands of tax-free prizes every month. In August, it is expected to award 5,520,000 prizes, ranging from £25 to £1 million.

They had great success. It’s staggering to think about the 22.4 million of us – about a third of the UK’s population – holding it.

The minimum bet is £25 and the maximum is £50,000. And if you don’t win, you don’t lose your shares—your bonds will roll over to the next monthly draw.

There are gems among the old National Savings accounts, still enjoyed by 329,000 savers.

Its Index-Linked Savings Certificate has not been sold for 12 years but savers who buy it can convert it into a new certificate for another two, three or five years.

Shrewd savers have done just this. NS&I told me there was a lucrative investment of £17.9 billion, up from £17 billion a year ago.

They get the Consumer Price Index plus 0.01 percent. With a current CPI of 8.7 percent, savers get excellent returns, all tax-free.

Expert: Sylvia has been writing about savings offers for over a quarter of a century

Expert: Sylvia has been writing about savings offers for over a quarter of a century

Of course there are downsides to NS&I. It rarely shows up on the best buy-in tables and it doesn’t want to either.

Its main task is to encourage all of us to save, but don’t forget that the goal is also to raise money for the Government.

So if it pays the top rate, it will disrupt the savings market and take money from other institutions.

In turn, they have to compete with higher rates.

That means borrowers have to spend more of their income on interest on their mortgages, loans, and credit card debt, thereby having less to spend elsewhere — and that can throw the economy off track.

It also needs to ensure that it pays depositors a fair rate.

In my view, that’s not paying enough savers on its multiple accounts. In fact, while some accounts rate it as ‘good’, others are downright bad.

Here’s my guide to the best and worst NS&I deals…

Check out the best savings rates in our independent best buys table compiled by Sylvia Morris and This is Money

Premium Bonds

The premium bond reward rate will increase for the second month in a row from 3.7 percent in July to 4 percent in August. An additional £30 million prize pool is up for grabs.

This marks a sharp increase compared to the end of 2022, when the reward rate was only 2.2 percent. However, the spike came after the rate of new investments made by savers slowed.

In this week’s July draw, some 22.4 million savers held £121.47 billion in bonds, up just £460,451 from the previous month — but in May, £706 million of new money was paid into bonds.

Premium Bonds are exclusive to NS&I and give you the chance to win tax free prizes. Next month each £1 bond has a one in 22,000 chance of winning. You can buy for yourself or as a gift for someone else.

INdictment: A good bet for your savings if you accept you may not win anything.

Income Bonds

These holders will see their interest rate increase on July 13 – up 0.55 percentage point to 3.4 percent.

Nearly half a million savers have easy access to their money. Income bonds, which you can buy online or over the phone, are especially popular with retirees because they pay interest every month.

Once the rate increases go into effect, they’ll pay one of the top monthly rates for an easy-access account that you can run over the phone.

Among its competitors, the best rate comes from Skipton Everyday Saver at 3.54 percent. If you want to go online, Investec pays an even better 4.12 percent.

INdictment: With a monthly earnings of 3.4 percent on an easily accessible account, this is a competitive rate.

Competitive: Income bonds, which you can buy online or over the phone, are usually popular with retirees because they pay interest every month

Competitive: Income bonds, which you can buy online or over the phone, are usually popular with retirees because they pay interest every month

Guaranteed Growth Bonds

About 37,000 savers have been tempted by this bond. The one-year flat-rate version currently pays 4 percent.

INdictment: Returns have been stalled since February, while the base rate has increased from 3.5 percent to 5 percent.

Top bonds, such as those from SmartSave and Cynergy banks, pay nearly a third as much as around 6 percent.

Guaranteed Income Bonds

It’s the same as a Guaranteed Growth Bond but you pay interest monthly at a slightly lower rate of 3.9 percent.

This lags behind the market, where competitors like Atom pay more than 5.5 percent.

INdictment: At 3.9 percent, bonds offer a paltry return for those looking for a monthly income.

Green Savings Bonds

You tie up your cash – a minimum of £100 over three years – and the money raised goes towards green projects.

This is NS&I’s newest savings account, offered online only, and has attracted 28,000 applicants since its introduction in October 2021.

It pays a steady 4.2 percent over three years versus the top 5.95 percent of rival Close Brothers Savings.

INdictment: Good for those who are happy to give up interest to support green projects selected by the Government.

Better odds: The odds of winning the monthly Premium Bond prize have been shortened to 1 in 22,000: the best in almost 15 years

Better odds: The odds of winning the monthly Premium Bond prize have been shortened to 1 in 22,000: the best in almost 15 years

Investment account

The 1.4 million savers in its Investment Account, once the mainstay of the NS&I savings chain, will only receive a 0.25 percentage point increase.

This paltry hike would raise their interest rate to 0.85 percent, one of the worst ever, and it’s the first hike this year.

The new rates were announced just days after the Chancellor, Jeremy Hunt, criticized big banks for not giving depositors higher interest rates.

But NS&I, which falls under the wing of the Treasury Department, pays one of the worst easy-access rates on offer.

It’s even worse than Halifax, which offers just 0.95 percent on its Everyday Saver account

INdictment: Bad at 0.85 percent — throw it away now!

Live Saver

This is an easy-to-access standard account, held by 368,000 depositors, that you can open and run online or over the phone.

This allows you to deposit money by debit card or online from your checking account. The rate rose to 3.4 percent from next week.

The top rate for accounts that are easy to access online comes from Family BS at 4.35 percent.

But if you prefer to run your account over the phone, the gap isn’t that wide. Top rates include Skipton’s Everyday Saver of 3.6 percent.

INdictment: The rates are pretty reasonable — and some people feel safe saving with the Government.

Fair deal: Live Saver Account lets you put money in by debit card or online from your current account.  The rate rose to 3.4% from next week

Fair deal: Live Saver Account lets you put money in by debit card or online from your current account. The rate rose to 3.4% from next week

Jump One

About 332,000 savers enjoy tax-free savings on this accessible Isa account, which you can open and run online or over the phone. They only get 2.4 percent but rivals pay as much as 3.85 percent.

Cynergy Bank pays for this on its Online Isa, while Skipton BS offers 3.8 percent on its Cash Isa which you can run over the phone, in the mail, online or at its branches.

NS&I Direct Saver pays a whole percentage point less than NS&I Direct Saver.

Both work the same way — the only difference is that your interest in Isa is automatically tax-free but you may have to pay tax on Saver.

INdictment: Even if you had to pay base rate tax of 20 percent for the 3.4 percent Direct Saver, you’d end up getting a lot more (2.7 percent) than you’d get here.

sy.morris@dailymail.co.uk

Some of the links in this article may be affiliate links. If you click on it, we may earn a small commission. It helps us fund This Is Money, and keeps it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.

#SYLVIA #MORRIS #NSI #deal #now.. #useless #stuff #throw

Leave a Comment