National Savings and Investments (NS&I) is a well-known name in the UK savings market thanks to its popular Premium Bonds.
While NS&I’s products often do not have the top savings rates, and Premium Bonds don’t pay a guaranteed interest rate, there are some unique qualities about the government-backed savings provider that could be appealing.
For example, Premium Bonds prizes are tax-free, and while there’s no certainty you’ll win in the monthly prize draw, those who have already used other tax-free allowances could find they’re a good way to shield savings from the taxman.
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Is NS&I safe?
Money held in NS&I’s products are backed by the Treasury, which means all your savings are 100% guaranteed by the government. This makes it very safe.
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NS&I can give this guarantee because it is essentially an arm of the UK government that borrows money from consumers to help fund public spending.
The government has not defaulted on its debts since the 1400s, so NS&I is one of the safest places to hold your savings.
Can NS&I go bankrupt?
Due to its structure as part of the UK government, NS&I can’t go bankrupt. For savers’ money to be in jeopardy, the UK itself would have to be on the verge of bankruptcy.
If that happens, savers would have bigger problems to deal with (for example, who’s going to pay for the NHS and police?).
This means any savings you have with the institution are 100% guaranteed.
In comparison, if your bank goes under, the Financial Services Compensation Scheme (FSCS) only compensates you up to a maximum of £120,000 per person, per banking licence. The FSCS applies to all UK regulator-approved financial institutions, including building societies and banks.
Is NS&I a good place to keep my money?
If you’re especially worried about the stability of other financial institutions then NS&I may be a good place to keep your money as it is the most stable place to hold your savings.
However, NS&I has a duty to keep the costs of borrowing low for the government, meaning it rarely provides the best savings rates.
Demand for its products is often so high that it doesn’t need to compete strongly for customers with other providers by offering the highest interest rates.
It means better rates are often available elsewhere, so you should shop around and work out which savings provider is best for you.
What are NS&I’s products?
NS&I offers a range of savings products designed to appeal to different people. It offers traditional savings accounts but also more unique products like their Green Savings Bonds and Premium Bonds.
Direct Savers
NS&I’s Direct Savers work in the same way as other easy-access savings products. It pays interest yearly and you can take your money out at any time with no penalty.
Direct ISA
The Direct ISA is NS&I’s equivalent of the easy-access ISA. You will not need to pay any tax on the interest you earn.
You can put up to £20,000 into an ISA every tax year, though the amount under 65s can put in a cash ISA will be limited to £12,000 a year from April 2027.
Guaranteed Growth Bonds
Guaranteed Growth Bonds are NS&I’s version of a fixed-rate savings account. You lock your money away for a set term to grow at an agreed-upon rate and you cannot access your money until the bond reaches the end of its term.
These differ from NS&I’s Guaranteed Income Bonds as interest is paid out at the end of the bond’s term.
You may want to check the best fixed rate accounts on the market to see how NS&I’s fixed bonds compare.
Guaranteed Income Bonds
NS&I’s Guaranteed Income Bonds are also effectively fixed-rate savings accounts, but in contrast to the Guaranteed Growth Bond, interest is paid monthly, rather than when the account matures.
Income Bonds
Income Bonds are easy-access savings accounts that pay interest earned directly to your bank account each month.
Junior ISA
A Junior ISA is a tax-free savings account that you can open for your children and pay into until they reach 18 years of age. The money held in a Junior ISA is legally the property of your child.
You can put up to a maximum of £9,000 into a Junior ISA each tax year.
Green Savings Bonds
NS&I’s Green Savings Bonds are also effectively fixed-term savings accounts, but the money saved in them is specifically used by the government to pay for green projects.
Premium Bonds
One of the most popular products from NS&I are Premium Bonds, which offer the chance to win tax-free cash prizes.
For each £1 invested, you get a chance of winning a prize. For instance, if you hold £500 in Premium Bonds, you’ll get 500 bonds and 500 chances to win a cash prize each month.
Cash prizes vary between £25 and £1 million, with two Premium Bonds holders winning the jackpot each month.
As you are not guaranteed to win any prizes in the monthly prize draws, money you put in Premium Bonds runs the risk of remaining stagnant.
If you leave your savings stagnant for long enough, they could start losing value in real terms as they are eroded by inflation.
