Are the new NS&I British Savings Bonds worth a look?
As independent UK financial advisers, we frequently discuss safe places to hold cash with clients, particularly business owners and younger savers who want clarity and security.
With NS&I’s newly relaunched British Savings Bonds in the market, it’s sensible to ask: are these bonds worth a look?
Below we explain what they are, the main advantages and drawbacks, and which saver profiles they suit best.
What are NS&I British Savings Bonds?
NS&I British Savings Bonds are fixed-term, government-backed savings products.
They offer a guaranteed interest rate for a chosen term. They generally come in a growth option (interest paid at the end of the term) or an income option (regular interest payments). Typical terms run from 1 to 5 years.
The product’s chief selling points are fixed returns and the security that comes from being backed by HM Treasury. This makes them strong contenders in the NS&I British Savings Bond category.
Why they might be worth considering
- Capital security: NS&I is backed by HM Treasury, so capital risk is extremely low, an attractive feature if you hold sums above standard bank protection limits.
- Predictable fixed returns: Locking in a fixed rate can be helpful in a volatile rate environment. If you expect interest rates to fall, a guaranteed rate is reassuring.
- Simplicity: The proposition is straightforward: deposit, hold for the term, and receive your interest. That clarity suits clients who want minimal complexity.
Where caution is required
Despite the strengths, there are some important caveats:
- Limited access: Funds are effectively locked for the chosen term, and early access is typically restricted or penalised, unsuitable if you need liquidity.
- Not always the absolute top rate: While NS&I rates can be competitive, specialist banks or fixed-term accounts sometimes offer marginally higher rates for specific terms, so it pays to compare. However, when choosing a safe option, NS&I British Savings Bonds can still be a compelling choice.
- Tax considerations: Interest is taxable unless held in a tax-sheltered wrapper; the effective return for higher-rate taxpayers will be reduced.
- Inflation risk: If inflation stays above the fixed rate over the term, real returns may be eroded.
Who should consider these bonds?
NS&I British Savings Bonds make sense for:
- Savers prioritising capital security, especially those with balances exceeding the FSCS protection limit, who prefer government backing.
- Those who are happy to lock away money for 1–5 years and who value predictable returns over potential market gains.
- Business owners or advisers working with younger clients (Gen Z) who need a simple, safe option to complement riskier investments might find value in these NS&I British Savings Bonds.
They are less suitable for savers who require flexible access, need to chase the absolute highest short-term rate, or want protection against a prolonged period of high inflation.
Read about the top 5 tax-efficient ways to save in the UK
Our verdict
The NS&I British Savings Bonds are worth investigating as part of a diversified cash strategy.
Their real strength is capital security and a simple, guaranteed return. They do not necessarily beat every specialist fixed-rate account.
For many clients, they will be an appropriate option, especially when preserving capital is the priority.
For others, these bonds should sit alongside ISAs, instant access cash for emergency funds, and potentially higher-yield fixed accounts. This depends on individual circumstances.
