NS&I has doubled the rate being offered on its green savings bonds to 1.30%, with the launch of a new issue.
The bonds, which run for a three-year term, will help to finance the Government’s green spending projects designed to tackle climate change and help sustainability.
A previous issue of the bonds was launched in October 2021, paying 0.65% annually over a three-year term.
Experts said the old rate had been a “real disappointment” but added that NS&I was now “in the right ball park” with its new issue.
Ian Ackerley, NS&I chief executive, said: “Since we launched green savings bonds in October 2021, average rates among fixed-term products have increased, along with the bank base rate.”
He said the new issue “means that savers can save at a new competitive rate whilst also supporting the UK’s green agenda”.
NS&I has doubled the rate on its green savings bonds. It's a dramatic step that shows the old rate was a real disappointment, but it may be enough to see it flourishSarah Coles, Hargreaves Lansdown
The bonds can be bought and managed at nsandi.com.
The minimum investment in the new bonds is £100, with a maximum limit of £100,000 per person for each issue.
Investors need to be aged 16 or over to purchase the bonds from NS&I.
The full amount deposited will be held for three years and cannot be withdrawn during this time.
Experts said the new rate may be enough to attract savers.
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown said: “NS&I has doubled the rate on its green savings bonds.
“It’s a dramatic step that shows the old rate was a real disappointment, but it may be enough to see it flourish.”
She added: “These bonds are specifically designed to raise funds for particular projects, so falling short of the fundraising target would have put a spanner in the works.
“They had to do something pretty dramatic to turn these bonds around, and doubling the rate may well be enough.”
At least NS&I is now in the right ball parkAndrew Hagger, Moneycomms
Andrew Hagger from Moneycomms.co.uk said of the new launch: “There are higher rates on standard fixed rate savings products, however for those looking to do their bit for ‘green’ projects, at least NS&I is now in the right ball park and worth considering.”
Becky O’Connor, head of pensions and savings, interactive investor, said: “Finally, green means go for savers…
“While this rate is not top of the best-buys for three-year bonds, which are currently around 1.8% according to Moneyfacts, it is far more compelling for those wanting their money, up to £100,000, to be put to productive use in the UK’s growing low carbon economy, at no risk.”
NS&I savings and investments are backed by HM Treasury, which means any money invested has 100% security.
Money held in a bank or building society meanwhile is generally protected by the Financial Services Compensation Scheme (FSCS), which protects consumers up to certain limits when financial institutions go bust.
Economic Secretary to the Treasury, John Glen, said: “I am pleased that savers across the UK will have the chance to invest in this second issue of green savings bonds at a new rate, one that reflects upward movement across the wider fixed-term market.”