Savers putting money into Green Savings Bonds will be helping fund vital green projects across the UK as part of the UK Government Green Financing Framework.

The minimum investment in Green Savings Bonds is £100, with a maximum limit of £100,000 per person for each issue. Investors need to be aged 16 or over to purchase the bonds from NS&I.

The full amount deposited will be held for three years and cannot be withdrawn during this time, although there is a cooling-off period in the first 30 days of investment. Customers must have a UK bank account capable of receiving BACS payments.

The interest rate is guaranteed for the whole term. Interest is earned daily and added once a year on the investment’s anniversary, and paid on maturity.

The first Issue of Green Savings Bonds went on sale on 22 October 2021. Since then more than £915m has been invested in them. The most recent issue of the bonds was in February 2023 with an interest rate of 4.2% – so the new rate is an increase of 1.5 percentage points.

The projects funded through Green Savings Bonds will include making transport greener, using renewable energy over fossil fuels, preventing pollution, using energy more efficiently, protecting natural resources and adapting to a changing climate.

NS&I: ‘Making a difference with savings’

Dax Harkins, NS&I chief executive, said: “I’m really pleased that we can offer a new issue of our Green Savings Bonds at a higher rate from today. This is a great opportunity for savers who want to see a guaranteed return on their investment while also making a difference with their savings by helping to make the world greener, cleaner and more sustainable.”

However, how does it match up against rival accounts in the market?

Mark Hicks, head of savings at Hargreaves Lansdown, said: “It’s a decent rate, but for those keen to seek out the most competitive deals on the market, it falls short. It’s marginally less competitive than the previous issue – which was 0.25 percentage points lower than the top rate when it was launched. This time it’s very slightly further behind the leader. It means you can do better elsewhere.

“However, it may well be enough for those savers looking to get a good deal for their money while contributing to green projects. The timing could work in its favour too. At the moment, an easing of rate expectations means fixed term savings rates have stabilised, so anyone who has been holding off from fixing in case rates moved higher will be looking for opportunities.

“Meanwhile, we’re almost a year on from when we saw a rush to fix savings rates – from last September. Those who fixed for a year may well be looking for a new home for their money, so this is a useful time to stand out. Choosing this moment to offer a reasonably competitive rate puts it in the running for the wall of money set to hit the savings market in the coming weeks and months.”