What has changed with the NS&I saving rates?
NS&I has raised the rates on its fixed-term British Savings Bonds, taking its two, three and five-year options above 5% AER.
The increases, introduced on 6 October 2026, mean savers can now earn 5.07% over two years, 5.10% over three years or 5.17% over five years. The one-year rate has also increased, from 4.82% to 4.99% AER.
The new rates put NS&I much closer to the leading fixed savings accounts available elsewhere. They do not, however, top the market. Savers prepared to use other providers could still find slightly higher rates, making the comparison about more than simply whether NS&I has crossed the 5% mark.
One important difference is how savings are protected. Money held with NS&I is backed directly by HM Treasury, while eligible savings with UK-authorised banks and building societies are normally protected through the Financial Services Compensation Scheme (FSCS), subject to its rules and limits.
NS&I’s fixed savings rates have moved above 5%
The latest increase applies to NS&I’s British Savings Bonds, which are available as Guaranteed Growth Bonds and Guaranteed Income Bonds. Both provide a fixed interest rate for a chosen term of one, two, three or five years.
NS&I says the increases reflect changes in the wider savings market and will also help it meet its net financing target for 2026/27. This is the amount NS&I is expected to contribute towards government financing after taking account of money flowing into and out of its products.
The increases are particularly notable because fixed savings rates have been rising across the wider market even though Bank Rate has remained at 3.75%. This reflects the fact that savings rates do not have to move directly with Bank Rate, with providers also responding to competition, funding needs and expectations for future interest rates.
What are NS&I’s new fixed savings rates?
All four terms have received an increase. The largest change is on the five-year option, which has risen from 4.85% to 5.17% AER.
NS&I's new fixed savings rates
All four British Savings Bond terms received a rate increase from 6 October 2026.
| Fixed term | Previous AER | New AER | Increase |
|---|---|---|---|
| 1 year | 4.82% | 4.99% | 0.17 % points |
| 2 years | 4.81% | 5.07% | 0.26 % points |
| 3 years | 4.83% | 5.10% | 0.27 % points |
| 5 years | 4.85% | 5.17% | 0.32 % points |
New rates effective from 6 October 2026.
Source: NS&I
The AER is the same for the Guaranteed Growth and Guaranteed Income versions of each term, but the way interest is paid differs.
Guaranteed Growth Bonds add interest to the bond annually and pay it when the bond matures. Guaranteed Income Bonds instead pay interest monthly into a nominated bank account. Because monthly interest is being taken out rather than left within the account to grow, the quoted gross rate on the Income Bond is lower than its AER.
Both versions require at least £500 to open. A saver can invest up to £1 million per person in each issue, but additional money cannot be added after the initial investment and withdrawals are not permitted before the end of the fixed term.
How do NS&I’s rates compare with the wider savings market?
NS&I is now close to the leading fixed savings rates, but higher rates were still available elsewhere when the new British Savings Bonds were launched.
Market data available on 6 October showed leading rates of 5.12% AER over one year, 5.16% over two years, 5.18% over three years and 5.35% over five years. The difference between NS&I and the highest available rate therefore ranged from 0.08 to 0.18 percentage points depending on the term.
How NS&I compares with leading fixed savings rates
The new NS&I rates are competitive, although higher rates were available elsewhere when the new British Savings Bonds were launched.
| Term | NS&I AER | Leading market AER | Difference |
|---|---|---|---|
| 1 year | 4.99% | 5.12% | 0.13 % points |
| 2 years | 5.07% | 5.16% | 0.09 % points |
| 3 years | 5.10% | 5.18% | 0.08 % points |
| 5 years | 5.17% | 5.35% | 0.18 % points |
Market comparison based on rates available on 6 October 2026. Savings rates and product availability can change at short notice.
Source: Moneyfacts and MoneySavingExpert
The comparison shows that NS&I is competitive without being the highest-paying provider. That distinction matters because choosing a savings account involves more than ranking products by AER alone. Minimum deposits, access restrictions, the way interest is paid and how savings are protected can all affect whether two apparently similar accounts are genuinely comparable.
Our guide to how to compare savings accounts properly explains the wider factors that can matter when looking beyond the headline rate.
How much does a slightly higher rate actually make?
A difference of 0.1 or 0.2 percentage points can look small, but its importance depends partly on how much money is being saved. Translating the percentage into pounds makes the trade-off easier to see.
For example, NS&I’s five-year British Savings Bond was paying 5.17% AER when the leading five-year fixed savings rate elsewhere was 5.35% AER. The difference is 0.18 percentage points.
Using £10,000 as a simple one-year illustration, compare interest at 5.17% with interest at 5.35%. This is an illustration of the annual rate difference, not a projection of the return over a five-year term. Actual interest depends on the product terms, how interest is paid or compounded and how long the money remains deposited.What does a 0.18 percentage-point difference mean?
The same rate difference becomes more significant as the amount saved increases. On £100,000, for example, 0.18 percentage points represents around £180 over one year before tax.
This does not make the higher-paying account automatically preferable. It simply puts a numerical value on the rate difference so that it can be considered alongside the other features of each account.
What does HM Treasury backing actually mean?
One of the main differences between NS&I and an ordinary bank or building society is the way the money is protected.
NS&I is backed by HM Treasury, meaning 100% of the money held in its products is backed by the UK Government. This protection is not subject to the normal FSCS deposit limit, which can become relevant for people holding particularly large cash balances.
Eligible deposits with UK-authorised banks, building societies and credit unions are instead normally protected by the Financial Services Compensation Scheme. Since 1 December 2025, the standard FSCS deposit protection limit has been £120,000 per eligible person, per authorised firm. Some banks operate under the same banking licence, so balances held across different brands can sometimes count towards the same protection limit.
There is also separate temporary high balance protection of up to £1.4 million for up to six months in qualifying circumstances, such as money received following the sale of a home or an inheritance.
This means the protection difference becomes particularly relevant where someone has more than £120,000 with a single banking licence. For balances within the FSCS limit, however, eligible savings with an authorised bank or building society can already have statutory deposit protection.
Calfiny’s guide to how safe UK savings accounts are explains how savings protection and shared banking licences work in more detail.
What else matters besides the interest rate?
The term is one of the most important considerations with any fixed savings account. NS&I does not allow withdrawals from these British Savings Bonds during the fixed term, so money committed for five years is fundamentally less accessible than money fixed for one or two years.
That matters because the highest rate does not necessarily correspond with the most suitable term. Fixing for longer can provide certainty over the interest rate, but it also means giving up access to the money for longer and retaining the same rate if market savings rates subsequently rise.
The way interest is paid can also matter. Guaranteed Income Bonds pay interest monthly, which may appeal to someone wanting regular income from their savings. Guaranteed Growth Bonds retain the interest within the bond and pay the accumulated amount when it matures.
There is also a tax difference to consider. Interest from British Savings Bonds is taxable in the same way as ordinary savings interest; the bonds do not provide the tax-free treatment associated with an ISA.
For Guaranteed Growth Bonds, NS&I states that the interest earned counts towards taxable income in the tax year in which the bond matures if the saver has reached the relevant threshold. With a multi-year bond, that can mean several years of accumulated interest becoming taxable in the same tax year.
The Personal Savings Allowance determines how much savings interest many people can receive without paying tax, while Tax on Savings Interest Explained looks more closely at when savings interest can become taxable.
So how should NS&I’s new rates be viewed?
The latest increase moves NS&I much closer to the top of the fixed savings market. Its two, three and five-year British Savings Bonds now all pay above 5% AER, while its one-year rate of 4.99% sits only slightly below that level.
Higher rates can still be found elsewhere. On 6 October, the gaps between NS&I and the leading equivalent fixed rates ranged from 0.08 percentage points over three years to 0.18 percentage points over five years. For many balances, that translates into a relatively modest difference in pounds each year, although the amount becomes larger as the savings balance increases.
NS&I’s distinguishing feature is therefore not that it necessarily pays the highest rate. It is the combination of a competitive fixed return and 100% HM Treasury backing, including for balances above the standard FSCS protection limit.
That does not make NS&I inherently better than an FSCS-protected savings account paying a higher rate. It means savers comparing the two need to decide how much weight they place on the rate, the length of the fix, access to their money, interest-payment arrangements, tax and the type of protection provided.
Conclusion
NS&I’s latest rate increases have made its British Savings Bonds considerably more competitive. From 6 October 2026, its two-year bond pays 5.07% AER, the three-year bond 5.10% and the five-year bond 5.17%, while the one-year option pays 4.99%.
The highest fixed savings rates elsewhere remain slightly ahead, so NS&I does not automatically provide the greatest return. However, the differences are relatively narrow and NS&I offers something structurally different: all money held with it is backed by HM Treasury rather than being protected up to the standard FSCS deposit limit.
For savers comparing fixed accounts, the useful question is therefore not simply whether a rate is above 5%. The rate needs to be considered alongside the amount being saved, how long the money will be inaccessible, how and when interest is paid, the potential tax position and how the savings are protected.
Research transparency Sources, Limitations & Methodology See how this research was carried out, what data was used and what the findings cannot tell us.
Methodology
This article uses current NS&I information to establish the interest rates, fixed terms, deposit limits, access conditions and interest-payment arrangements for British Savings Bonds following the rate increases introduced on 6 October 2026. Current Moneyfacts and MoneySavingExpert market information is used to compare the new NS&I rates with leading fixed savings rates available elsewhere at the time of analysis. Financial Services Compensation Scheme guidance is used to explain the current protection available for eligible deposits with UK-authorised banks, building societies and credit unions, while NS&I information is used to explain the separate HM Treasury backing applying to money held with NS&I. Current UK Government guidance is used to explain the taxation of savings interest and the Personal Savings Allowance. Market-leading rates are used to provide context rather than to recommend individual savings providers or accounts.
Limitations
Fixed savings rates and product availability can change at short notice, so the rates shown in this article represent the market around 6–7 October 2026 rather than rates that will necessarily remain available. Accounts with similar fixed terms may differ in minimum deposits, maximum balances, eligibility requirements, funding windows, interest-payment arrangements and access conditions, so AER alone does not make two products directly equivalent. The simple £10,000 calculation illustrates the annual effect of a rate difference and is not a projection of the total return from a multi-year fixed account. FSCS protection depends on eligibility and the banking licence under which deposits are held, while NS&I savings are backed separately by HM Treasury. Tax outcomes depend on individual circumstances and applicable rules.
Sources
- NS&I – Higher interest rates for NS&I's fixed-term British Savings Bonds from today
- NS&I – Interest rates
- Moneyfacts – New British Savings Bonds from NS&I now offer more than 5% AER
- Moneyfacts – Best UK savings rates this week
- MoneySavingExpert – NS&I boosts savings rates
- FSCS – Deposit protection limit
- GOV.UK – Tax on savings interest
