Posted on November 27th, 2016 | Categories - Savings
Over the past few months, interest rates on savings accounts have fallen to record low levels and with inflation rates predicted to increase, savers can be forgiven for feeling pessimistic.
However, has the Autumn Statement brought some much needed relief to beleaguered savers?
Details are sketchy, but the answer may be “yes”, all be it in a very limited way.
A new NS&I bond
In his first, and as it turns out last, Autumn Statement, Philip Hammond announced that National Savings & Investments (NS&I) would launch a new bond in 2017.
Mr Hammond said that the interest rate on the new Investment Guaranteed Growth Bond would be “market leading” and the “indicative” rate would be 2.2%.
Savers will have to tie up their capital for three years, but nevertheless the indicative rate is certainly attractive. The best rate on a comparable three-year fixed rate bond currently stands at just over 1.60%.
Anyone over the age of 16 will be able to open the new bond, when it goes on sale in the Spring of 2017.
So far so good.
However, many savers will be disappointed that they will only be able to pay £3,000 into the new bond, giving them a maximum interest payment of £202 before tax.
Every little helps
If the Pensioner Bonds, launched in 2015 are anything to go by, the new bonds, despite the relatively small maximum allowable investment, will be popular.
Of course, only time will tell whether the indicative rate of 2.2% remains attractive in six months’ time, and how much will be eaten away by inflation, which is predicted to rise steeply by then.
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