Competition for savers’ money continues to intensify across the UK, with Leeds-based wealth management firm The Private Office questioning whether the latest increases to NS&I’s British Savings Bond rates go far enough.
NS&I increased rates across its one, two, three and five year British Savings Bonds at the end of July, despite the Bank of England maintaining Bank Rate at 3.75%.
The changes included an increase in the one year Guaranteed Growth Bond to 4.72% gross/AER, while the five year Growth Bond moved to 4.75%.
The Private Office said the increases have made NS&I considerably more competitive but noted that higher returns can still be found elsewhere in the savings market.
The development comes during a period of unusually strong competition for deposits.
Moneyfacts reported earlier this summer that the average one year fixed savings rate had climbed significantly, while the number of savings products available had reached record levels. More than half of savings accounts were paying above Bank Rate by June.
By late July, some easy access accounts were offering rates of around 5%, while leading longer term fixed accounts were approaching similar levels.
Why savers still choose NS&I
Interest rates, however, are only one consideration.
Unlike conventional bank deposits, money held with NS&I is backed directly by HM Treasury.
This can be particularly attractive to people holding significant cash balances.
Deposits with authorised UK banks, building societies and credit unions are generally protected through the Financial Services Compensation Scheme, with the deposit protection limit having increased from £85,000 to £120,000 per eligible person, per authorised institution in December 2025.
NS&I savings have a different structure, with the Government backing 100% of money deposited.
For savers with cash significantly above the FSCS limit, this can reduce the need to spread deposits between multiple banking licences.
However, savers accepting a lower interest rate in exchange for that simplicity and security could potentially sacrifice meaningful returns, particularly on larger balances.
A more competitive savings market
The wider rate environment also presents advisers with an interesting planning challenge.
For much of the ultra low interest rate era, the opportunity cost of holding excessive cash was relatively obvious.
With cash savings products now offering rates above 4%, deciding how much to keep in cash versus investing can appear less straightforward.
Inflation, tax, investment timescales, emergency reserves and an individual’s willingness to accept investment risk all remain relevant.
The Bank of England’s decision to keep Bank Rate at 3.75% in July means competition between savings providers is unlikely to disappear immediately.
For Yorkshire savers, the message from the latest rate changes is therefore less about whether NS&I is “good” or “bad” and more about the importance of comparing what is available.
In a market where the difference between savings rates can be substantial, loyalty and convenience can carry a measurable cost.
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