NS&I Interest Rates: Cuts to 3.05% AER

NS&I has cut the rates on its easy-access accounts for the first time since last spring, with Direct Saver and Income Bonds both now at 3.05% AER. The reductions follow the Bank of England’s December rate cut and offer a useful signal for anyone trying to figure out where cash savings are heading next.

Direct Saver rate: 3.05% gross/AER · Income Bonds rate: 3.01% gross/3.05% AER · 1-year fixed Issue 88: 3.91% gross/3.98% AER · 2-year fixed Issue 76: 3.95% gross/4.02% AER · Previous 1-year bond peak: 6.2% AER (August 2023)

What are the new NS&I interest rates?

NS&I products split into two broad categories: variable-rate accounts you can access anytime, and fixed-rate bonds that lock your money away for a set term. Each product carries a gross rate and an AER (Annual Equivalent Rate), which compounds interest to show the true yearly return. Understanding both figures helps you compare NS&I against accounts that quote gross or AER differently.

Variable rates

NS&I’s two most popular easy-access accounts both changed on 12 February 2026. Direct Saver, the flagship instant-access account, fell from 3.30% AER to 3.05% AER (NS&I Official). Income Bonds, which pays interest monthly rather than annually, dropped from 3.26% AER to 3.05% AER on the same date. The reduction was the first on these accounts since March 2025, and followed the Bank of England cutting its base rate from 4% to 3.75% in December 2025.

Fixed rate products

Fixed-term bonds require you to lock money away with no early access. The current 1-year Guaranteed Growth Bonds Issue 88 pays 4.07% AER, while the 1-year Guaranteed Income Bonds Issue 88 pays 4.00% gross or 4.07% AER (NS&I Corporate). The 2-year Guaranteed Growth Bonds Issue 76 sits at 3.98% AER. A minimum of £500 applies, with a £1 million ceiling per issue. Interest on all fixed savings is taxable, unlike Premium Bonds prizes which are tax-free.

Reduced interest rates for selected variable NS&I products

The February 2026 cuts mark a notable shift for NS&I’s variable-rate accounts, which had held steady since the previous reduction in March 2025. Direct Saver now requires a minimum deposit of just £1, making it accessible to small savers, though the maximum sits at £2 million. Income Bonds needs at least £500 to open, pays monthly, and caps out at £1 million.

Direct Saver changes

Direct Saver now pays 3.05% gross/AER, a reduction from 3.30% (NS&I Official). The account pays interest once a year on the anniversary of account opening. One practical advantage: funds arrive the next working day if you withdraw before 3pm on a business day.

Income Bonds changes

Income Bonds fell from 3.26% AER to 3.05% AER on 12 February 2026 (Money To The Masses financial news). The monthly payment structure makes it popular with retirees or anyone who needs regular income. The rate applies from the first pound, and the account remains fully accessible.

Is NS&I 6.2% still available?

No. The 6.2% AER rate that briefly appeared on 1-year fixed bonds in August 2023 is long gone. At that point, NS&I was under pressure to attract deposits after the government’s pandemic-era savings surge, and it offered highly competitive fixed rates to pull savers away from high-street banks. Those rates peaked and then fell steadily as the Bank of England began its rate-cutting cycle.

End of 6.2% bonds

The August 2023 peak on 1-year bonds represented the highest rate NS&I had offered in years. Since then, successive reductions have brought current 1-year fixed rates down to 4.07% AER (NS&I Official). The direction of travel has been consistently downward, with occasional rebounds: NS&I actually boosted fixed-term rates in November 2025 before cutting them again in January 2026.

Alternatives now

For savers who want rates above 4%, alternatives exist, though they come with trade-offs. Chase offers a saver rate of 4.5% AER, but requires holding a current account with the bank (MoneyWeek). Platforms such as Raisin UK list variable easy-access rates up to 3.95% AER, edging closer to NS&I’s Direct Saver despite offering more flexibility. The average easy-access rate fell to 2.48% AER by 1 January 2026, meaning NS&I still beats the market average on its variable products.

NS&I British Savings Bonds rates

British Savings Bonds is the brand name for NS&I’s fixed-term bond range. Each “issue” represents a specific term length and rate structure, and NS&I launches new issues as rates move. Current offerings centre on 1-year and 2-year terms, with different products depending on whether you want interest paid annually (Growth) or monthly (Income).

Current fixed issues

The 1-year Guaranteed Growth Bonds Issue 88 pays 4.07% AER, while the Income variant pays 4.00% gross or 4.07% AER (NS&I Official). For longer terms, the 2-year Guaranteed Growth Bonds Issue 76 pays 3.98% AER. Guaranteed Growth Bonds compound interest annually back into the bond itself, whereas Guaranteed Income Bonds transfer interest monthly to your nominated current account.

Historical comparison

Rates have cycled up and down over the past two years. The 1-year Growth rate hit 4.20% AER on 7 November 2025 before dropping to 4.07% AER on 6 January 2026 (NS&I Corporate). A historical 3-year fixed rate of 3.55% AER was available from 18 July 2025, according to NS&I’s official records. The July 2025 increase pushed 1-year Growth Bonds from 4.05% to 4.18% AER, briefly reversing the downward trend before the January 2026 cuts.

NS&I Direct Saver interest rate

Direct Saver is the entry point for most new NS&I customers. It functions as a straightforward savings account: you deposit any amount from £1 upwards, earn a variable rate, and can withdraw whenever you choose. The rate adjusts periodically as NS&I responds to market conditions and Bank of England decisions.

Rate details

Direct Saver currently pays 3.05% gross/AER (NS&I Official). The rate fell from 3.30% on 12 February 2026, the first reduction since March 2025. Interest accrues daily and is paid annually on the account anniversary. The account has no monthly management fees or charges for standard operations.

Eligibility

Direct Saver is available to UK residents aged 16 or over. You can hold up to £2 million across all NS&I products, though the per-account maximum for Direct Saver itself is £2 million. Joint accounts are permitted. Applications can be made online directly through NS&I or by post. If you’re looking for information on car maintenance costs, you might be interested in the Вартість заміни ланцюга ГРМ в Ірландії.

NS&I Premium Bonds: the rate that stayed put

While NS&I has been cutting rates across most of its product range, Premium Bonds tell a different story. These are a unique savings vehicle: instead of earning interest, your contribution enters a monthly prize draw. Prizes range from £25 to the jackpot of £1 million, and all winnings are tax-free.

The prize fund rate currently sits at 3.6%, after a reduction from the previous level in August 2025 (MoneyWeek). This figure represents the assumed annual return across the entire prize pool, but individual results vary widely based on luck. The probability of winning any prize in any given month depends on how many bonds you hold and the random draw mechanism.

NS&I Interest Rate Timeline

Six key moments have shaped NS&I’s rate landscape since mid-2025:

The pattern is clear: NS&I has followed the Bank of England’s rate-cutting cycle, with the most aggressive reductions landing on variable easy-access accounts in February 2026.

How NS&I Compares to the Market

Three comparisons put NS&I’s current position in context:

The implication: NS&I remains a credible option for risk-averse savers who value government backing over maximising returns. For those comfortable with private banks, alternatives exist that consistently outpace NS&I on both fixed and variable rates.

“These cuts aren’t a surprise. NS&I already slashed the rates on eight of its fixed rate bonds at the start of January and now two of its easy-access savers will be impacted, following the general trend we’ve seen for variable savings rates after the base rate cut in December.”

— Matt McKenna, personal finance expert at Finder (MoneyWeek)

NS&I fixed savings are backed by HM Treasury, which means your money is as safe as it gets in the UK. However, interest is taxable unlike Premium Bonds prizes, which are paid free of HM Revenue and Customs.

— MoneySavingExpert (MoneySavingExpert)

Summary

NS&I has joined the broader trend of falling savings rates, cutting its easy-access accounts to 3.05% AER while simultaneously reducing fixed bond offerings. The cuts follow the Bank of England’s December 2025 base rate reduction and reflect NS&I’s need to manage its funding position relative to market conditions. The peak rate of 6.2% AER from August 2023 now looks like a distant high-water mark. The gap between NS&I rates and the best private bank alternatives has widened — for risk-averse UK savers who want government-backed security, NS&I products remain relevant, but the smart move for anyone with idle cash is to compare the current fixed bond market before settling for an easy-access account that pays below the going rate.