Similar to Premium Bonds, Green Savings Bonds are purchased via the HM Treasury’s own savings institution, NS&I. Any money invested into NS&I through these bonds is passed onto the Treasury and will contribute towards Government spending to address the climate crisis. However since their launch, Green Savings Bonds have faced criticism for its “paltry” interest rates which experts view as being of no good use to serious savers.
“It pays less than the top easy-access savings account, yet with the Green Bonds you have no access to your money and it’s locked away for three years.
“The right comparison is with the top three-year fixed savings account and that pays nearly three times what the Green Bonds are paying.”
On top of the less than stellar interest rates, Mr Lewis also believes Green Savings Bonds are not unique compared to other Government regulated savings institutions.
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He added: “While NS&I is as safe as it gets, with all UK regulated savings institutions you are protected up to £85,000 per person, so that has no practical advantage for most.
“Though those with very large amounts of long-term savings using NS&I for safety may want to use this Bond, as it provides higher rates than NS&I’s alternative accounts.
“This is quite simply not an account that those whose focus is on maximising interest will look at.
“It’s likely only something those willing to sacrifice substantial interest in order to support what they hope will be green causes are likely to consider.”
Agreeing with the ITV host’s train of thought, Laura Suter, AJ Bell’s Head of Personal Finance, recognised the lack of incentive for savers to invest in Green Savings Bonds outside of their moral conscience regarding the climate change issue.
Ms Suter said: “All that hype for such a paltry rate, is definitely what some savers will be thinking after the announcement of the interest rate on the Government’s green savings bonds.
“Why would savers lock their money away for three years for the same interest rate they can currently get in an easy-access savings account?
“This equation makes even less sense now that the nation is looking down the barrel of an interest rate rise from the Bank of England, which will lead to a hike in savings rates.
“Many had hoped that NS&I would leap to the top of the league tables with the new product and they could have a triple win: a great rate, a Government-backed product and putting their money to greener use, but that’s not the case.
“Instead the rate is not far off a third of the top-paying account on a three-year term.
“However, the product will likely still appeal to some, who want to help fund the Government’s green projects and want the security of a Government-backed product.
“But they have to accept the pretty meaty payoff here.
“If someone invested £10,000 they’d generate £553 of interest with the top-paying three-year account over the entire term, while with the NS&I offering they’d get £196 – costing them more than £350 to save in a greener way.”
Those interested in buying Green Savings Bond can start their application via NS&I’s website.
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