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Sign up nowIs the new NS&I Green Savings Bond worth getting?
The rate of the three-year fixed account has fallen to 2.95%
National Savings and Investments (NS&I) has pruned the rate of its three-year Green Savings Bonds – for the second consecutive time.
The seventh issue of Green Savings Bonds pays a fixed rate of 2.95% AER, which is almost half of what it offered in August 2023 at 5.7% AER.
Here, Which? takes a closer look at how the account stacks up against other three-year deals on the market and how you can go green with your finances.
What does the Green Savings Bond offer?
The Green Savings Bond was launched by NS&I in 2021 to encourage investment in environmental projects. It can be opened with a minimum deposit of £100, up to a maximum of £100,000.
The seventh issue of Green Savings Bonds pays a fixed rate of 2.95% AER for three years, but that's a one percentage point drop compared with the previous issue, which paid 3.95% AER.
The new rate means someone who invests £10,000 will earn £924 interest over three years, which is £331 less than a saver who opened a previous issue of the account.
Those who opened previous issues of the Green Savings Bond won't see a change to their rate as the bonds are fixed for three years.
How have the rates changed?
As this is the seventh issue of the Green Bond Savings account, here’s how the rates have changed since it launched.
The rate peaked in August last year when the fifth issue offered 5.20% AER. However, since then savings rates have been declining across the market.
- Find out more: What is National Savings and Investments?
Can you get a better rate elsewhere?
While the current deal offered by NS&I's three-year savings bond is far better than its first iteration offering 0.65% AER, it's well below the average 4.12% offered for longer-term fixed accounts in February.
This table shows the top rates for three-year fixed accounts, ordered by AER.
| Account | Rate | Minimum deposit |
|---|---|---|
| Sensible Savings Fixed-Rate Bond | 4.6% AER | £5,000 |
| Castle Trust Bank Fixed Rate e-Saver | 4.55% AER | £1,000 |
| Zenith Bank UK Limited Three-Year Fixed-Term Deposit | 4.55% AER | £1,000 |
| Bank of London and the Middle East Premier Deposit Account | 4.5%* EPR | £1,000 |
| Isank, Raisin UK – Three-Year Fixed-Term Deposit | 4.5% AER | £1,000 |
Source: Moneyfacts. Correct as of 1 February, but rates are subject to change. *The account from Bank of London and the Middle East is a Sharia-compliant product, and offers an expected profit rate (EPR) as opposed to an annual equivalent rate (AER).
NS&I now sits well below the current top provider for a three-year bond, which is from Sensible Savings and pays 4.6%. In fact, NS&I's deal sits at the bottom of the table in second to last place.
NS&I's deal also fails to beat the current rate of inflation, which unexpectedly rose from 3.9 % to 4% in December 2023.
- Find out more: best savings accounts February 2024.
Should you invest in NS&I Green Bonds?
The rate may not lead the market, but there are other reasons why savers may choose to open an NS&I Green Savings Bond.
Help fund green projects
Money saved with NS&I’s Green Savings Bonds will be used to fund 'green' projects picked by the Treasury.
This includes eco-friendly transport systems, using renewable energy over fossil fuels and protecting natural resources.
The government says that funds raised from the bonds will be invested in green projects within two years.
Savings protection
NS&I might not be attractive for its leading rates, but savers are offered comfort by its longevity and trustworthiness.
All funds deposited are backed by the Treasury and there's no limit on compensation if NS&I goes bust.
By contrast, most other savings accounts are protected by the Financial Services Compensation Scheme (FSCS), which guarantees deposits of up to £85,000 per provider.
- Find out more: FSCS – are your savings safe?
How to go green with your finances
You might not think twice about the environmental impact of choosing one bank over another, but many UK high street banks are among the worst culprits when it comes to financing fossil fuels.
To help you choose a greener bank, we examined the environmental policies of 13 of the UK’s leading current account providers and only three earned our Which? Eco Provider recommendation.
The Co-operative Bank, Nationwide and Triodos have no exposure to fossil fuels in their banking activities.
- Find out more: Which? reveals Britain's Greenest Banks.
