National Savings & Investments (NS&I) have announced a change to the terms of their Guaranteed Income Bonds and Guaranteed Growth Bonds.

Rather than a cut in interest rates in June, NS&I slashed the maximum investment in each issue from £1,000,000 to £10,000 – although the lower limit does not apply to those reinvesting maturing bonds.

The message is clear: NS&I or, more accurately, the Treasury does not want any more savers’ money. It is not that the government has stopped needing to borrow – far from it – but for now it is much cheaper and easier to sell government bonds (gilts) to institutional investors. Whereas the NS&I 3-year Guaranteed Income Bond pays 1.9%, the yield on a 3-year gilt is under 1% at the time of writing.

If NS&I’s change has hit your savings plans, talk to us about the other options still available.