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Trick to beat NS&I’s best buy 6.2% one-year bonds

Paloma Kubiak
Written By:
Paloma Kubiak

National Savings and Investments (NS&I) is offering 6.2% AER on Guaranteed Growth Bonds and Guaranteed Income Bonds. But there is a way to get more interest to beat even these best buy rates.

There was big fanfare around NS&I’s August launch of the Guaranteed Growth Bonds paying 6.2% gross/AER fixed for one year, and the Guaranteed Income Bonds paying 6.03% gross/6.2% AER, fixed for one year.

Rates on these new issues (Issue 72) have soared from the previous 5% offered, and are the highest ever interest rates offered for both bonds which first went on sale in 2008.

They’re also STILL the most competitive one-year fixed rate savings accounts on the market.

But there is a way to beat this rate by choosing an alternative one-year fixed deal via a savings club which offers cashback.

Investment platform Hargreaves Lansdown launched Active Savings in 2018 in a bid to get a slice of the action in the cash savings market. It now holds £7.5bn of cash savings.

Savers can pick and mix from a range of savings products offered by partner banks which span easy access, limited access, fixed rate deals and ISAs. It currently lists 40 products available from 17 bank partners.

And until Friday 29 September, it’s offering £25 cashback for new and existing customers who deposit £10,000 or more in a single fixed term account of six months or longer (opt in by then but deposits can be paid in until 28 November). The cashback isn’t available on cash ISAs. The £25 will then be paid into your Active Savings account by 8 December.

This means, once the cashback is factored into the deals available through the savings club, it essentially boosts the interest rate to 6.25% AER on its one-year fixed rate deal to beat the market best.

The table below shows the impact of the £25 cashback:

Term Rate (gross) Deposit Cashback Effective rate + cashback Partner bank/provider
6 months 5.40% £10,000 £25 5.65% * Santander International
9 months 5.50% £10,000 £25 5.75% ICICI
12 months 6.00% £10,000 £25 6.25% * Close Brothers
18 months 5.77% £10,000 £25 6.02% Paragon
24 months 5.80% £10,000 £25 6.05% * Aldermore
36 months 5.85% £10,000 £25 6.10% Close Brothers

(* market-leading rates)

‘Industry’s best kept secret’

Mark Hicks, head of Active Savings at Hargreaves Lansdown, said: “You can beat NS&I’s table-topping rate over one year, by taking advantage of the savings industry’s best kept secret.

“A growing number of savers are taking advantage of cash savings platforms, and the number of people using Active Savings has grown substantially over the years.

“You can open a single account with a platform, and then switch easily between accounts from different banks. It brings your savings together into one place, to make them easier to keep an eye on, and Active Savings lets you manage your cash ISAs, investments and pensions alongside your savings, so you can keep track of all your savings and investments in one place. Not only is it more straightforward, but platforms like Active Savings can often can access rates and products that aren’t available from banks directly.

“Savers receive FSCS protection for up to £85,000 across all the banks and building societies on Active Savings, in the same way as they would be if they placed a deposit directly.”