Will the first online-only savings bond mean savers will miss out?
The new government-backed savings bond from National Savings & Investment (NS&I) is set to launch in April this year, offering what Chancellor Philip Hammond has described as a ‘market-leading’ interest rate of 2.2% over three years. The bond is also set to become the first savings account offered by NS&I which will only be offered online, differing from previous products which could be opened over the phone or by postal application.
However, there are concerns that the online-only status of the new savings bond may result in thousands of savers missing out. The most recent data from the Office of National Statistics suggests that 5.3 million people in the UK have never used the internet – just over one in ten (10.2%) of the whole population. The majority of these people are either elderly or disabled, prompting fears that making the new savings account only available online will cut these sectors of society off from enjoying the benefits offered.
Baroness Ros Altmann, former pensions minister, described the decision as “shocking”, especially as “many older people live alone, with no computer access”, meaning that they will have no way of setting up the new account themselves, should they wish to do so.
NS&I has defended their decision, saying that it “reflects changing customer preferences”, referring to the fact that an increasing number of people are applying for their savings accounts online. NS&I also described the move to online-only as “cost-effective”, as without the need to open and read paper applications or take applications over the phone, the state-owned savings bank will be able to save money on running costs.
Aside from the accessibility of the new account, questions have also been raised over whether it can truly be seen to offer a market leading rate. A similar account offered by Atom Bank, called a Three-Year Fixed Saver, offers the same rate of 2.2% over the same time period with a much higher maximum investment rate – £100,000 compared to NS&I’s £3,000. However, the account from Atom Bank doesn’t allow early withdrawals which the new savings bond does, subject to a penalty payment of 90 days worth of interest. So, whilst the new account does offer an attractive investment opportunity for those looking to grow their investment, it’s still worth looking around to see what’s on offer elsewhere.