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Savers flock to best buy NS&I: Is it overwhelmed with demand?

Paloma Kubiak
Written By:
Paloma Kubiak

Desperate savers are turning to NS&I as its easy access deals unusually sit at the top of the best buy tables. But is the government’s savings arm buckling under pressure?

Popular and familiar NS&I leads the easy access savings range with two best buy products: its Income Bond paying 1.15% gross and its Direct Saver offering 1% gross.

This is unusual as more mainstream providers, as well as sharia banks have typically led the best buy tables.

But it comes as savings deals have been pulled at a rapid pace across the market in light of the Bank of England cutting the base rate to a historic low of 0.1%.

And NS&I was due to implement rate cuts from 1 May but made a U-turn decision on this in a bid to support savers during the coronavirus pandemic.

As such, NS&I which has always been popular with savers because their money is 100% guaranteed by the government, is gaining much more interest as demand for the products soar.

The good news for savers is that NS&I confirmed there are no total limits in terms of customer numbers or capital invested for Income Bonds. The minimum investment per customer is £500 and the maximum investment is £1m.

However, it reviews the rates on all products regularly and recommends changes to HM Treasury when it believes they are “appropriate, to ensure that we continue to balance the interests of our savers, taxpayers and the stability of the broader financial services sector”.

Is it buckling under pressure?

Anna Bowes, co-founder of independent rate monitoring site Savings Champion, said NS&I is overwhelmed, as other banks have been when they sit at the top of the best buy tables in the current low interest environment.

She said: “NS&I is rarely in the best buy tables at all, never mind taking the two top spots in the easy access market. As a result, even more beleaguered and desperate savers than normal are enquiring and hoping to open one of these accounts, which NS&I is struggling to cope with.

“Savers who can’t open the account online will need to be patient if they hope to speak to someone – as the wait can be a long one. There may even be a queue to get onto the website – so it’s clear that these accounts are proving to be extremely popular.”

Bowes added that NS&I is in a tricky position after scrapping a planned rate cut and was unlikely to foresee such demand after competitors pulled their offerings.

Complaints to NS&I also seem to be on the rise, with customers unhappy about the length of time it takes for money to appear in the new NS&I account, as well as problems with uploading ID.

What does NS&I say?

A spokesperson confirmed it is seeing large numbers of customers contacting NS&I to manage their savings.

“We are sorry that some customers have had difficulties doing so and we are working hard to ensure all customers can manage their savings with NS&I,” they said.

They added: “As we have smaller teams at the moment, our phone and postal service is experiencing delays and we are working as quickly as we can to process a high number of customer enquiries. We are encouraging customers to use the NS&I website to manage their savings wherever possible. In common with other websites, we have a queuing system that is activated when we experience a very high number of visits to our site. For customers who are most in need, our call centre team is available from 7am to 10pm every day, but customers may experience a longer wait than usual to get through.”

Regarding the issues with uploading ID, NS&I said for new customers, it is required by law to check an applicant’s identity and address when they apply to invest or register for the online service.

“We normally check their identity and address electronically. However if this is unsuccessful, we will ask them to send us some documents instead,” NS&I explained.

With the lag in deposits showing in the NS&I Income Bonds account, NS&I said it is due to a quirk in the way interest is calculated.

If a customer applies to open a new NS&I Income Bonds account, or makes a subsequent deposit, by debit card between 8pm on the 20th of a month and the 5th of the following month, the updated balance won’t display online in the customer dashboard at nsandi.com until the 6th of the month.

Instead, the transaction shows in the ‘pending transactions’ tab further down on the Income Bonds account page.

NS&I said: “This is because of a period where NS&I calculate the monthly interest payments for Income Bonds holders. A customer’s deposit will still accrue interest from the date they originally made the transaction – and we will pay that accrued interest on the next available interest payment. In short, the customer’s money will earn interest from the day they make their deposit.

“We have made this messaging clear on our website, including when a customer tries to pay money in to an Income Bonds account, on the Income Bonds product page and customers’ online dashboard when they login to their accounts.”