NS&I set to increase saving rates

National Savings & Investments (NS&I) has announced that it will be increasing the rates on its Direct ISA, Direct Saver and Income Bonds on 29 December.

The rate on the Direct ISA will increase from 0.10% AER to 0.35% AER, the rate on Direct Saver will rise from 0.15% AER to 0.35% AER and the rate on Income Bonds will rise from 0.15% AER to 0.35% AER.

A reason for the rate rises is to help NS&I achieve its annual Net Financing target of £6 billion, in a range of £3 billion to £9 billion, for 2021/22.

The Direct ISA from NS&I is an easy access ISA that requires a £1 minimum deposit to open and can be opened and managed online and by phone.

Currently the top rate in our easy access ISA chart that is available to new customers is 0.67% AER on Shawbrook Bank’s Easy Access Cash ISA – Issue 18. The rate on this account will be 0.32% higher than the new rate on NS&I’s Direct ISA but requires a £1,000 minimum deposit to open. It must be opened online but can be managed by phone as well.

Savers looking for an easy access ISA that can be opened with a £1 minimum deposit will find that both Paragon Bank and Cynergy Bank have the top rate of 0.65% AER. Paragon Bank pays this rate on its Triple Access Cash ISA (Issue 5) which can only be opened and managed online. Savers should be aware that withdrawals on this account are restricted to three in a 12 month period, if more withdrawals are made it pays a lower rate of interest. Cynergy Bank’s Online ISA (Issue 17) pays 0.65% AER and allows unlimited withdrawals via a nominated account. This account must be opened and managed online but a Cynergy Bank Authenticator App or Digipass is needed to open and operate the account.

Direct Saver is an easy access savings account that requires a £1 minimum deposit to open, whereas Income Bonds is an easy access savings account that needs a £500 minimum deposit to open. Direct Saver can be opened online or by phone and Income Bonds can be opened online, by phone or by post.

The top rate in our easy access savings account chart that is available to new customers is Investec Bank plc’s Online Flexi Saver, which pays 0.71% AER. This rate is 0.36% higher than the new rates on Direct Saver and Income Bonds. The account, however, requires a minimum opening deposit of £5,000. Unlimited withdrawals are allowed on this account, which can only be opened and managed online.

The top rate on an easy access savings account that requires a £1 minimum deposit to open is Cynergy Bank’s Online Easy Access Account (Issue 43), which pays 0.70% AER, including a 0.40% bonus for 12 months. This account allows unlimited withdrawals via a nominated account. It must be opened and managed online but savers will need a Cynergy Bank Authenticator App or Digipass to open and manage the account.