Green Savings Bonds get long overdue rate hike

Sarah Coles, head of personal finance at AJ Bell, comments:

“This hike has been a long time coming. The last rise in the rate on these bonds was back in June, when it went up from 3.82% to 4.45%. At the time, it put the bonds within shouting distance of more competitive deals, but the collapse of the US-Iran ceasefire over the summer changed everything. Savings rates have been rising ever since, leaving Green Savings Bonds in the dust.

“Today’s rise still puts these products some way behind the NS&I British Savings Bonds, which offer 5.10% over the same fixed period, let alone the most competitive on the market at 5.23% at the time of writing.

“To be interested, you would need to be a passionate advocate of the government’s green projects. For people who would only ever consider ethical savings products, the market is smaller and less competitive, so these rates compare fairly positively to significant competitors, and may be worth considering.

“When it comes to savings, you tend to pay a price for green intentions – the only question will be how much of a price you’re willing to pay. While savings rates are stronger, people may be more willing to forgo a slice of returns. However, with the outlook for inflation so uncertain, you need to bear in mind that over the course of three years, one of the things you could be sacrificing is some of the spending power of your savings.

“Talk of higher NS&I rates always inspires conversations around whether the Premium Bond prize rate will rise, so it’s worth knowing that the target and rate for Green Bonds is set entirely separately from the NS&I overall funding target, and is therefore no indication of the direction of travel for the rest of their products.”

Sarah Coles
Head of Personal Finance

Sarah Coles is head of personal finance. She’s passionate about helping people get to grips with their money, so they have more freedom to do the things that really matter to them in life. She regularly provides insight and analysis for the press, writes columns and articles and appears on TV and radio. She covers everything from savings and investments to pensions and tax. Sarah is an award winning former financial journalist, spending almost 20 years working for publications from Bloomberg to Moneywise and AOL Money. She has worked as a financial spokesperson for the past nine years, and most recently won Headline Money’s Expert of the Year award.
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