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As promised in the March budget, NS&I have launched their latest fixed rate savings bond.

The three- year “Investment Guaranteed Growth” bond will pay 2.2 percent interest on savings up to £3,000. The interest rate is higher than any other fixed rate savings accounts currently available and this product is ideal if you:

  • are happy to invest and manage your Bond online
  • want to know exactly what return you’ll get
  • can leave your money invested for three years
  • have £100 or more to invest

Interest on the bond will be paid gross, without any tax deduction. It will therefore count towards the personal savings allowance, which allows basic-rate taxpayers to earn £1,000 in interest tax-free.

The interest will be added to the bond at the end of each year. Someone with the maximum £3,000 deposited would earn £66 in the first year, £67 in the second year and £69 in the third year.

The bond is designed to be held for the full three years. Anyone cashing in all or part of the bond early will be hit with a penalty of 90 days’ interest on the amount cashed in. You can find out more and apply online here.

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