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Rhiannon Philps

Content Writer
Published: 08/02/2024
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Green Savings Bonds are now paying 2.95% AER after NS&I cut rates.

National Savings & Investments (NS&I) released a new issue of its Green Savings Bonds last week, paying a reduced rate of 2.95% AER over a three-year fixed term.

The rate has fallen from the 3.95% AER that the previous issue paid and is considerably less than the 5.70% AER these bonds paid in August 2023.

This latest rate cut comes soon after NS&I announced a reduction to the prize fund rate on its Premium Bonds.

As their rates continue to drop, Green Savings Bonds are falling short of the latest rate of inflation of 4%. Meanwhile, many savings accounts and ISAs are currently offering inflation-beating rates.

Going green

The Government-backed NS&I launched Green Savings Bonds in 2021 as a way to fund green Government schemes, including energy-efficiency and zero-emission transport projects.

They can be an appealing option if you want your savings to be put towards a good cause, such as helping the environment.

The lower rate of 2.95% AER applies if you save into Green Savings Bonds Issue 7 from 31 January onwards, and this rate is guaranteed for three years. You can’t access your money during this period.

If you saved into a previous issue of Green Savings Bonds, your rate won’t change.

Are they worth it?

When NS&I introduced Green Savings Bonds in October 2021, they only paid 0.65% AER. The rate has steadily increased over the years, reaching a peak of 5.70% AER from 22 August 2023.

At this point, Green Savings Bonds compared relatively well against other fixed savings accounts on the market.

However, while the rate on Green Savings Bonds has dropped 2.75 percentage points from its 2023 peak, the average rate on standard three-year fixed bonds has only fallen by 0.98 percentage points, according to Moneyfacts data .

And with average rates on three-year fixed accounts standing at 4.11% in February, with leading rates in excess of 4.50%, you are likely to find many accounts offering a better return than Green Savings Bonds.

Alternatively, you could find an even better return if you don’t lock your money away for three years. For example, the average rate on one-year fixed bonds stood at 4.62% at the start of February with many providers currently paying more than 5.00% AER.

The leading easy access accounts also currently pay more than 5.00% AER, as average rates continue to hold relatively steady at 3.17% compared to 3.19% at their 2023 peak.

If the environmentally-friendly aspect of Green Savings Bonds appeals to you, it doesn’t necessarily mean you need to sacrifice the interest you can earn. For example, you could consider ethical savings accounts that also support sustainability projects, and these may pay a higher rate than Green Savings Bonds.

Compare savings accounts

You can compare savings rates on our chart to help you find a suitable account for your situation and savings goals.


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