NS&I Green Savings Bonds dubbed ‘a disappointment’
But the rate is easily beaten by other fixed rate bonds on the market and has been branded ‘a disappointment’ by finance experts.
The bonds will be on sale for at least three months from today and the money invested in them will help finance green projects selected by the government.
Chancellor Rishi Sunak announced in the Budget in March that NS&I would be launching the savings product. The minimum investment is £100 with a maximum limit of £100,000 per person and 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The full amount deposited will be held for three years and cannot be withdrawn during this time although there is a cooling off period for the first 30 days. Interest is earned daily and added once a year on the investment’s anniversary, and paid on maturity.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “NS&I Green Bonds are unlikely to be picked by enormous numbers of savers at this rate, because with a return of just 0.65%, early enthusiasm for the bonds is likely to wither.
“It’s such a disappointment for savers who were hoping for a competitive rate that meant they could do the right thing for the planet and their pocket at the same time. Instead, NS&I is relying on savers who are willing to pay a price for going green with their savings.”
Andrew Hagger, personal finance expert from Moneycomms.co.uk, said: “We knew these bonds were on the cards but no announcement was made on the rate until now – and perhaps you can see why, 0.65% is way out of kilter with the market.
“Someone investing £20,000 at 0.65% will earn £130 per year in interest with NS&I compared with the best buy deal from J N Bank at 1.81% which pays £362 per annum – a difference of almost £700 over three years.
“I appreciate that the government is looking to fund essential green projects, but at a time of raging inflation where consumers are being squeezed financially from all angles, I can’t see people rushing to hand their cash over to the government at such a heavy discount.”
The bonds will help finance the government’s green spending projects designed to tackle climate change and help make the UK greener and more sustainable.
These projects 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.
The green savings bonds can be bought and managed online via the NS&I website. Savers must have a UK bank account capable of receiving BACS payments.