maturity of your one-year NS&I British Savings Bond approaches - consider your options for investing your savings.

In the financial landscape of the United Kingdom, a significant change has taken place. NS&I, a well-known financial institution, has reduced the interest rate on its British Savings Bonds yet again, marking the fourth time this has happened in the past year.

As of now, the current rate for the growth bond and the monthly income option stands at 4.18%, a decrease from the previous rate of 4.75% AER. This move comes amidst a competitive market, where other financial institutions are offering higher rates for similar products.

For instance, JN Bank, a prominent player in the market, offers the highest five-year bond rate at 4.52%, while its one-year fixed savings account pays an impressive 4.39%. Interestingly, Vida Savings and Shawbrook Bank both offer 4.31% for one-year fixed cash ISAs, compared to 4.18% for another NS&I bond.

The top 10 one-, two-, three-, and four-year fixed savings accounts are currently paying more than the NS&I bond. JN Bank also leads the market in the three and four-year categories, offering rates of 4.45% and 4.35% respectively.

Meanwhile, NS&I's British Savings Bonds, which were on sale between 30 August and 5 October 2023 (and were available exclusively to existing customers between 30 August and 5 October 2024), are maturing over the coming weeks.

It's important to note that more than 486,000 people hold a British Savings Bond, as at 31 March, and over 225,000 customers bought NS&I's one-year Guaranteed Growth and Guaranteed Income bonds in 2023. However, interest earned above certain thresholds on these products is subject to income tax.

In contrast, cash ISAs, which have a £20,000 ISA limit per tax year, and Premium Bonds do not attract tax on the interest earned. A "mix and match" approach, using an ISA plus a taxable savings account, could be beneficial for those with more to save.

The highest one-year fixed deposit product currently available on the market offers a maximum annual interest rate of about 2.55% AER; no institution is offering a one-year fixed deposit with an AER above 4.3% as of September 2025. The top one-year fixed deposit rate noted is 2.55%.

Easy-access savings accounts with the top rates are Chase (4.75%) and Revolut (4.5%).

The Bank of England is expected to cut rates, potentially leading to further cuts later this year or early next year. This could further narrow the gap between the interest rates offered by NS&I and those of its competitors.

In conclusion, while NS&I's British Savings Bonds continue to be a popular choice among savers, the current market offers a range of alternatives with higher interest rates, especially for those willing to tie their funds up for a fixed term. It's always advisable to compare rates and terms before making a decision.