National Savings and Investments (NS&I) has recently launched a government-backed Investment Bond. The main details of the Bond are as follows:
- minimum deposit of £100
- balances on the account must be between £100 - £3000
- applications can only be made online and up to April 2018
- applicants must be aged 16+ years
- fixed interest rate of 2.2% for three years paid yearly and without tax deduction
- early withdrawals incur a penalty equal to 90 days' interest on the amount cashed in.
According to Moneyfacts, the NS&I offering is a market leader on the interest rate with similar three-year fixed term bonds having an average interest rate of 1.24%. Competitors' minimum investment thresholds are generally higher, typically starting upwards from £1,000 and caps on the maximum capital invested are significantly higher than the NS&I limit of £3,000.
Internet links: GOV.UK news NS&I Moneyfacts