This is up from the 3% rate offered in August 2022, which has more than doubled from the previous 1.3%, and 0.65% available at launch in October 2021.

Money invested in the Green Savings Bonds help finance green projects across the UK.

They’re designed to be held over a three-year period, and savers aged 16+ can open them online at NS&I where they can deposit a minimum of £100 and up to £100,000 (per person or jointly).

Interest is earned daily and added once a year on the investment’s anniversary, and paid on maturity.

Ian Ackerley, NS&I chief executive, said: “This is an excellent new opportunity for savers who want to grow their funds over the next three years, at the same time knowing that their investment will make a difference by helping finance the Government’s green projects. Customers can save while helping to make the world greener, cleaner and more sustainable.”

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Projects 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.

How good is the Green Savings Bonds Issue 4?

The rate offered on these savings accounts have risen from the 0.65% available at launch. This means someone who put £5,000 into the bonds at launch will be earning just £32.50 a year in interest, compared to the £210 a year that a new customer will be getting now, according to Laura Suter, head of personal finance at AJ Bell.

And while 4.2% over three years sounds a healthy rate, it is a little way below the best three-year bond rate.

According to Savings Champion data, the top five three-year fixed rate bonds pay 4.25% AER or more. Four offer a rate of 4.4% AER. These include Access Bank UK on its Sensible Savings, which requires a minimum £5,000 for this account.

Union Bank of India UK also pays 4.4% AER on its three-year fixed rate deposit account. Here, savers need a minimum £1,000. Secure Trust Bank also pays 4.4% and requires a minimum balance of £1,000. Meanwhile, Close Brothers Savings requires £10,000 for its three-year 4.4% bond.

However, savers can also get an expected profit rate of 4.45% with Sharia-compliant Gatehouse Bank, with its three-year Woodland Saver, according to Moneyfacts. See YourMoney.com’s A guide to Sharia savings accounts for more information.

While other providers pay more than the Green Savings Bonds, all NS&I products offer 100% capital security as NS&I is backed by HM Treasury.

Suter said: “While NS&I will rarely be the top rate in the market, it isn’t far off the market-leader for a three-year bond, which is paying 4.45% interest. Interestingly, the top rate on the market is also a green savings offering: Gatehouse Bank’s Woodland Saver, which plants a tree for every account opened. But savers are still sacrificing returns in order to have the backing of the UK Government, and it will be a personal decision on whether they think the lost interest is worth it.”

Just last week, NS&I launched new issues of one-year fixed rate Guaranteed Growth Bonds and Guaranteed Income Bonds.