UK savings: Interest rates above 5% may not last, experts warn

National Savings and Investments (NS&I) has increased rates on its British savings bonds. The two-year product now pays 5.07%, the three-year bond 5.1% and the five-year bond 5.17%.

The one-year rate has risen to 4.99% from 4.82%. The bonds carry fixed rates for their full terms and are available to new customers and people whose existing accounts are maturing.

NS&I limits and conditions

Savers can invest up to £1m per person in each issue, with a minimum investment of £500. NS&I is backed by the UK Treasury and says it secures 100% of savings above the amount usually covered by bank guarantees.

Interest is paid monthly on the income version of the bonds. On the growth version, it is added each year and paid when the bond matures. The money cannot be withdrawn before the fixed term ends.

Other fixed-rate deals

At the time covered by the report, the highest-paying one-year fixed-rate bond offered 5.12%, while the top five-year rate was 5.37%. The providers named were Union Bank of India (UK) and GB Bank.

Rachel Springall of Moneyfactscompare.co.uk said attractive products may be withdrawn once a provider has attracted enough savings. Sarah Coles of AJ Bell said savers could still earn more elsewhere.

People needing penalty-free access may keep some money in an easy-access account. Starling offers 5% on Easy Saver for customers who opened or open a current account on or after 1 October; the rate applies to balances up to £25,000 during a six-month bonus period. Marcus by Goldman Sachs has raised its one-year fixed-rate savings account from 4.3% to 4.75%.