Everything you need to know about National Savings & Investments
We explain how government-backed National Savings & Investments (NS&I) differs from high-street banks. And take a look at the kind of savings and investment products they offer, too.
What is NS&I?
NS&I stands for National Savings and Investments and is a government-owned bank that offers different types of savings accounts, such as easy access, fixed rate bonds, ISAs and Premium Bonds. It is backed by HM Treasury to give those looking for a safe place for their money the peace of mind that 100% of their savings are protected.
How do NS&I products work?
Choose the type of NS&I product you want to open, such as a savings account, ISA or Premium Bonds
Deposit your money - effectively lending it to the Government - to receive a return. This could be interest on your savings or tax-free prizes in the case of Premium Bonds
Withdraw your money when you need it, depending on the terms of the account. Some savings products are instant-access. Others, such as fixed rate bonds, lock your money away for an agreed period, and apply a financial penalty if you want to get your cash out earlier
Your money is backed by HM Treasury, making it safe and secure. If you’re saving with another regulated bank, the FSCS guarantees to protect the first £85,000 of your deposits
NS&I also focuses solely on savings and investments, so unlike high-street banks it doesn’t offer mortgages or credit cards
What are the different types of national savings and investment accounts?
NS&I offers a range of products to savers, including:
Direct Saver
What is it? An easy access account that pays interest annually. No notice is needed and there’s no penalty for withdrawals, but the interest rate is not usually as competitive as other accounts
Minimum/Maximum holdings: Save from £1 to £2 million per person
Main benefit: Easy access and money protected by the Government
Income Bonds
What is it? A guaranteed monthly income for savers, with no notice needed and no penalty for withdrawing money. You must be aged at least 16 to invest
Minimum/Maximum holdings: Save from £500 to £1 million per person
Main benefit: Pays a regular monthly amount on your savings
Premium Bonds
What is it? The chance to win a tax-free return through a monthly prize draw. The odds of winning the lowest amount of £25 are around 24,000 to 1 per £1 bond each month.
Minimum/Maximum holdings: Save from £25 to £50,000
Main benefit: A fun way of saving and you could win a tax-free amount up to £1 million
Direct ISA
What is it? A cash ISA offering tax-free returns with no notice period or penalty for withdrawals
Minimum/Maximum holdings: Save from £1 to £20,000 in the current tax year
Main benefit: A tax-free way to earn a return on your savings
Green Savings Bonds
What is it? A way to receive a fixed rate of return by locking your money away for 3 years.
Minimum/Maximum holdings: Invest from £100 to £100,000
Main benefit: As well as the guaranteed return, your money is invested in green projects
Junior ISA
What is it? A tax-free way to save for children up to the age of 18
Minimum/Maximum holdings: Invest from £1 to £9,000 in the current tax year
Main benefit: A way to encourage children to start saving and earn tax-free interest
How do I buy Premium Bonds?
You can buy Premium Bonds from NS&I’s website, using its secure online system. You will just need to have your debit card details handy.
You can also buy them over the phone, or complete an application form and send it along with a cheque payable to NS&I
You buy bonds in £1 denominations, but each investment must be at least £25. The more bonds you buy, the more your chances of winning improve, with winning amounts ranging from £25 to £1million.
You must be over 16 to save in Premium Bonds, but they can be held in the name of under-16s by parents or guardians. Premium Bonds are drawn on the first working day each month and you need to have held each bond for a full month before you can win.
Do I have to pay tax on my savings?
While tax is payable on the gross interest from NS&I savings accounts, such as Direct Saver and Income Bonds, it will fall within the personal savings allowance (PSA) of most customers.
This means you only pay tax on your savings if you earn more than £1,000 in interest (for a basic (20%) rate taxpayer) and more than £500 in savings interest (for a higher rate (40%) taxpayer). Top rate taxpayers (45%) are likely to pay tax on their savings.
There is no tax to pay on Premium Bonds because all prizes are paid out tax-free. NS&I Direct ISAs are also free of tax up to the annual ISA limit (£20,000 for the 2023/24 tax year).
Is NS&I safe?
NS&I is a ‘government savings bank’, so it can offer you a greater level of protection when it comes to your savings. Most other banks are protected by the FSCS (Financial Services Compensation Scheme), while NS&I is backed by HM Treasury.
Unlike the FSCS maximum limit of £85,000 per person per institution, with NS&I every penny you invest is protected if something goes wrong. However, while you can’t ‘lose money’ you can see the value of your savings erode if the level of inflation is higher than the interest you receive, for example. This is true of savings accounts with any provider – not just NS&I.
You can’t lose money in Premium Bonds either. But you’ll earn zero interest – so you need to be successful in the monthly prize draws to see a return on your money.
Other useful guides
You may also find the following guide interesting:
Compare savings accounts with MoneySuperMarket
NS&I is not the only option for savings. You can view savings accounts from a range of leading providers with MoneySuperMarket and compare what’s on offer to see which are the most suitable for your needs.
Whether you’re looking for easy access, fixed rate, regular savings or ISAs, we’ll show you the options with the highest interest rates. What’s more you can also compare the minimum and maximum deposits too, as well as any notice periods and how you will be able to manage the account.