National Saving & Investments doubles rates on green bond after backlash

National Security & Investments (NS&I) has doubled the interest rate offered on its green savings bond after it came under fire for offering measly returns for savers the first time round.

The state-owned bank will now pay customers 1.3 per cent annually for the three-year fixed-rate bond, up from the initial rate of 0.5 per cent when it first offered the bond to customers in October.

Analysts say that NS&I has been spurred into action by a backlash from investors and commentators, after its first offering lagged well behind the market leading offering of 1.86 per cent.

Laura Suter, head of personal finance at AJ Bell, said: ““NS&I points to this rising interest rate environment as the reason for doubling the rate from 0.65% to 1.3%. 

“However, what’s more likely is that the initial launch, which at the time offered the same interest rate as an easy-access current account, went down like a lead balloon and NS&I had no choice but the raise the rate to draw in more money and reach its funding targets.”

Analysts at retail investment platform interactive investor, say that the rates are still “nothing to shout about”.

“The new bumper rates are in line with the Bank of England’s base rate, nothing more”, said Myron Jobson, Senior Personal Finance Analyst. 

“It is good form from the Treasury-backed bank as many others have appeared uninterested in raising theirs from ultra-low levels.”

 Not all savers will welcome the rise however, with savers who signed up to the initial Green Savings Bond locked in to lower rate of 0.65% for the next three years.