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.”

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.