Published On: Sun, Apr 14th, 2024

British Savings Bond explained: Check if you can benefit from new NS&I account | Personal Finance | Finance

A financial expert has spoken about who would be best suited to the new British Savings Bonds.

The three-year fixed rate bond has gone on sale through NS&I with a rate of 4.15 percent.

Ashley Akin, senior tax associate and expert contributor at Dividend Earner, spoke to about the advantages of the new account.

He said: “One of the biggest advantages of British Savings Bonds is the unparalleled safety they provide.

“These Bonds are backed by Her Majesty’s Treasury, meaning your initial investment is 100 percent secure – something very few savings vehicles can offer.

“This makes them ideal for risk-averse savers who place capital preservation above all else.”

The Bonds have for offering a low interest rate relative to rates available with other savings accounts.

Ms Akin said: “While the specific rate may not be the absolute highest available, this predictable return stream can be invaluable for financial planning and budgeting purposes.

“You’ll know exactly how much interest income to expect, unlike products like Premium Bonds that have variable prize draws.”

She said one group who may find the Bonds suitable for their funds are those relatively new to saving and investing.

She explained: “With a minimum purchase amount of just £500, British Savings Bonds represent an accessible way to start building a savings nest egg with one of the most trusted institutions in the UK financial system.

“The straightforward online or telephone purchase process also caters well to those intimidated by more complex investment options.”

However, she said one downside of the account is the fixed rate, meaning there is no flexibility with the Bonds once they are purchased.

As such, she said they would not be suitable as a source for near-term purchases or as an emergency funds pot.

She added: “From an economic perspective, I wouldn’t expect the launch of British Savings Bonds to be an earth-shattering catalyst.

“However, they could provide some modest boosts by encouraging additional consumer savings and helping the Government fund its activities in a relatively cost-effective manner. Every little bit helps when it comes to promoting financial stability.”

For the latest personal finance news, follow us on Twitter at @ExpressMoney_.

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