Published On: Thu, May 21st, 2020

Income Bonds: NS&I MUST give notice to savings account holders if interest rates drop | Personal Finance | Finance


Saving money for the future is something which many will do, however there’s a whole host of ways in which people may decide to manage their cash. For some, it may be that this includes National Savings and Investment (NS&I) Income Bonds.

There are limits which apply to Income Bonds.

For instance, an account must be opened with a minimum of £500.

Additionally, the maximum investment is £1million per person.

Currently, the interest rate for NS&I Income Bonds is 1.15 percent gross/1.16 percent AER.

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The interest is calculated daily, and it is then added to the bank account on the 5th of each month, or on the next working day if the 5th falls on a weekend or a bank holiday.

It may be that this interest rate changes – it’s variable to it can go up or down from time to time.

On the website, NS&I gives the example of the Bank of England base rate changing, or when rates in the general savings market change.

However, the savings bank explains it gives advance notice of any rate changes “by publishing adverts in a range of newspapers and by updating our website”.

“The new interest rate will apply if your account remains open.

On the other hand, if the change in interest rates is favourable to the saver, then NS&I won’t write to them personally.

“Remember that if inflation is higher than the account interest rate, it will reduce the true value of the money in your account over time,” the Income Bonds brochure adds.

Kay Ingram, Director of Public Policy at LEBC Group, said: “The Government backed savings are suitable for those who wish to receive a regular income from their savings, and these savers have recently received a boost due to the Treasury’s decision to maintain the variable rate of interest at 1.15 percent ( 1.16 percent AER).

“A planned rate cut from May 1, announced in February will not now happen, making this rate highly competitive following recent cuts to other savings rates, following the Bank of England slashing the cost of borrowing to 0.1 percent.”

Ms Ingram, who is a chartered financial planner, added: “This enables savers to consider if they can do better elsewhere before the rate cut comes in.

“Funds can be accessed at any time without notice or penalty with a minimum withdrawal rate and minimum remaining balance of £500.”



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