Newspaper article The Journal (Newcastle, England)

Disappointment over Three-Year Savings Bond Rate; BUDGPST2017In Association With

Newspaper article The Journal (Newcastle, England)

Disappointment over Three-Year Savings Bond Rate; BUDGPST2017In Association With

Article excerpt

Byline: Vicky Shaw Reporter

HARD-PRESSED savers have been offered some help in the Budget as the Chancellor announced that a new market-leading bond will be launched next month.

NS&I (National Savings and Investments) will offer a new threeyear investment bond with a rate of 2.2% from next month.

But some experts described the rate as "disappointing", and said savers taking out the deal could still struggle to achieve real returns.

The bond was previously unveiled in the Autumn Statement, with Chancellor Philip Hammond confirming the rate yesterday.

The deal will be available for 12 months from April and it will be open to savers aged 16 and over who want to save between PS100 and PS3,000 over the next three years.

Experts said the fixed-rate savings market generally has seen some improvements since the deal was first announced in the Autumn Statement.

At that time, the best paying threeyear bond had a rate of 1.63%.

Rachel Springall, a finance expert at website Moneyfacts, said NS&I's 2.2% rate matches a three-year bond rate now on offer from Atom Bank, which also pays 2.2%.

She said: "With Atom Bank, savers can invest from PS50 and all the way up to PS100,000, whereas NS&I has a much lower upper limit of PS3,000."

For savers who want to put money away for five years, Atom Bank also has a deal paying a higher rate of 2.4%, she said.

Ms Springall said that with rising living costs expected to have a growing impact in the coming months, it is going to be very difficult for savers with money sitting in a cash account to get a decent return in the years ahead.

Kate Smith, head of pensions at Aegon UK, described the PS3,000 limit on the new bond as "meagre".

And Maike Currie, investment director for personal investing at Fidelity International, said: "While this may be a market-leading rate, anyone saving into the new investment bond will struggle to achieve a real return. …

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