What is National Savings and Investments? NS&I explained
About 25 million people in the UK have some kind of NS&I savings account or investment. But what is it and why is it so popular?

- What is NS&I?
- What accounts can I open with NS&I?
- What are the pros and cons of NS&I?
- NS&I Income Bonds
- NS&I Direct Isa
- NS&I Premium Bonds
- NS&I Junior Isa
- NS&I Direct Saver
- NS&I Green Savings Bond
- NS&I Investment Account
- Which NS&I accounts are tax-free?
- Can I invest with NS&I if I don’t live in the UK?
- NS&I accounts not currently available

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National Savings and Investments (NS&I) is a savings bank owned by the UK government. It offers Premium Bonds and a range of other savings and investments, including easy access savings accounts and ISAs.
NS&I has been around since 1861 when it was called the Post Office Savings Bank. The bank’s aims were to provide a secure place for people to save and a source of funds for public borrowing – these remain NS&I’s objectives today.
About 25 million people have some kind of NS&I savings account or investment.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, says: “NS&I is a national treasure, and the fact your money is 100% guaranteed by the Treasury is a major draw for savers, particularly at a time when so many things in life are so uncertain.”
NS&I explained
What is NS&I?
NS&I is best described as a ‘government savings bank’ – and it’s the only one of these in the UK (other countries have them too, backed by their respective governments).
Unlike other banks, there are no shareholders in NS&I, instead there are ‘stakeholders’, the biggest of which is the UK taxpayer. NS&I only offers savings – you can’t get a NS&I mortgage, current account or credit card.
When you save or invest with NS&I, you’re actually lending your money to the government. When NS&I sets its interest rates, it is obliged to balance the interests of savers (by offering decent rates) and taxpayers (by raising money for the government).
Some products are unique to NS&I – such as index-linked savings certificates and Premium Bonds. But others are similar to savings accounts available elsewhere.
What accounts can I open with NS&I?
Product | Minimum investment | Maximum investment | Age limit | Single or joint accounts | Opening and managing your account |
---|---|---|---|---|---|
Income Bonds | £500 | £1m | 16 | Both | Online, phone, post |
Direct ISA | £1 | £20,000 (a year) | 16 | Single only | Online, phone |
Premium Bonds | £25 | £50,000 | 16 | Single only | Online, phone, post |
Junior ISA | £1 | £9,000 (a year) | From birth (opened by a parent) | Single only | Online |
Direct Saver | £1 | £2m | 16 | Both | Online, phone |
Green Savings Bond | £100 | £100,000 | 16 | Both | Online, phone |
Investment Account | £20 | £1m | 16 | Both | Post |
What are the pros and cons of NS&I?
A big selling point is funds held in any NS&I account are 100% backed by HM Treasury.
Anna Bowes of Savings Champion says this unique protection is a real benefit of NS&I. “All banks and building societies are covered by the Financial Services Compensation Scheme – which protects up to £85,000 per person, per provider, should the worst happen,” she explains, “Because NS&I is backed by HM Treasury, 100% of all the money deposited with the provider is guaranteed.”
Another plus point is NS&I offers Premium Bonds. This unique savings product gives you a chance at winning a cash prize of up to £1million each month.
Rachel Springall, finance expert at Moneyfacts, says: “Premium Bonds could be a useful savings vehicle for those looking for a chance to win the prize draw. But savers can also cash in their bond at any time, which could be ideal for those who need their money back amid the cost of living crisis.”
It’s worth noting rising inflation erodes the spending power of savers’ cash if their pots are not earning interest at a higher rate than inflation. Premium Bonds don’t pay any interest at all, so unless you receive a significant win your money will lose value in real terms.
But some other NS&I accounts rarely offer the best interest rates to savers.
“Anyone with money in the Direct Savers is missing out on a better rate elsewhere,” says Coles. “The Direct Saver will allow you to save up to £2m with the institution, and it’s all guaranteed. It can feel like an easy solution for savers with enormous balances, but they could do far better by spreading their cash across the best-paying accounts.”
NS&I Income Bonds
Income Bonds are easy-access savings accounts paying interest directly into your bank account each month. The current rate on Income Bonds is 2.6%.
They can be a good option as you’ll get a regular income from your savings, and you can withdraw your money without notice or penalty. On the downside, you won’t benefit from compound interest as the interest is paid into your bank account each month.
NS&I Direct Isa
This is a cash ISA, which accepts transfers in from other providers. You can save some or all of your annual £20,000 ISA allowance into the NS&I Direct ISA. The current rate on a Direct ISA is 2.15%.
You can withdraw your money whenever you want, and without penalty. However, you can find other easy access cash ISAs with much higher interest rates.
NS&I Premium Bonds
Premium Bonds give you the chance to win tax-free prizes of £25 to £1m each month. Bonds cost £1 each but you need to buy them in batches of 25.
There’s no interest paid on Premium Bonds but NS&I often quotes the ‘annual prize fund rate’. This rate describes the average payout and currently stands at 3.15%. It means the odds of winning anything are roughly 24,000 to one each month.
The big selling point of Premium Bonds is you could win £1m, although there are loads of small prizes too. You can also buy bonds as gifts for children.
But the odds aren’t in your favour. If you have the maximum £50,000 invested, you’re likely to see a steady supply of £25 prizes at best. The big risk is you might win nothing.
NS&I Junior Isa
This is a tax-free savings account for children up to the age of 18. The Junior ISA allowance stands at £9,000 for the 2022-23 tax year. The current rate on a Junior ISA is 3.4%.
Junior ISAs are a great way to save for your child from birth. But the cash becomes theirs when they turn 18. They can spend it on whatever they want and there’s no guarantee your child will make sensible choices.
NS&I Direct Saver
This is an easy access account paying interest annually. The current rate on a Direct Saver is 1.8%.
On the plus side, you can add money to your account or withdraw it whenever you want. But on the downside, you’ll find better interest rates on NS&I fixed rate accounts, or easy access savings accounts elsewhere.
NS&I Green Savings Bond
This is a three-year fixed rate bond which promises to invest the cash in environmentally-friendly projects. The current rate is 3%.
It’s a decent savings product if you want your cash to fund green infrastructure products. But you can’t access your money until the end of the term and the interest rate is easily beaten by mainstream three-year bonds.
NS&I Investment Account
This cash account can be opened for a child under the age of 16 by their parent, guardian or grandparent. You can also invest in trust for someone else.
Interest is paid annually and you can make withdrawals whenever you want.
However, the interest rate is very low (0.4%).
Which NS&I accounts are tax-free?
“Very few accounts available to new customers are tax free these days – just the cash ISA, Junior ISA and the Premium Bonds. As with all ISAs, returns on its Direct ISA and Junior ISA are paid tax-free,” explains Anna Bowes of Savings Champion.
Returns on Index-Linked Savings Certificates and Fixed Interest Savings Certificates is tax-free too, but these products aren’t available at the moment.
Tax is payable on the gross interest from NS&I savings accounts such as Direct Saver, Investment Account and Green Bonds. But for most people, it will fall within their personal savings allowance (PSA).
Can I invest with NS&I if I don’t live in the UK?
Although NS&I is a UK savings provider, you can save and invest with it if you live outside the UK.
To do so, you’ll need a UK bank or building society account in your name. This is because NS&I can only make payments to, and receive payments from, a UK account in pounds sterling.
NS&I accounts not currently available
NS&I Guaranteed Income Bonds
NS&I Guaranteed Income Bonds work like fixed-term saving accounts with terms of one, two, three or five years. You are ‘guaranteed’ an income on your savings as the interest rate is fixed for the duration of the term.
Guaranteed Income Bonds aren’t on sale at the moment, but existing customers can renew a maturing bond.
NS&I Guaranteed Growth Bonds
NS&I Guaranteed Growth Bonds are similar to other fixed-rate bonds and allow you to invest up to £1m per person, per issue, in a single lump sum. The interest rate is guaranteed for the duration of the bond.
The bonds are sold in 'issues' with limited availability – there aren’t any on sale at the moment, but existing bondholders can renew a maturing bond.
Index-Linked Savings Certificates
These are issued in two, three and five-year terms with the interest rate linked to CPI inflation (before 2019 it was linked to RPI inflation). Returns are typically 0.01% above inflation and are paid tax-free.
“If you are lucky enough to have some of these, you should think very carefully before encashing them, especially at the moment with inflation so high,” says Bowes, “They guarantee to pay a return marginally higher than inflation, as measured by the Consumer Prices Index (CPI). On maturity you can renew up to the total value of your maturing certificate, including all the interest and index-linking earned.”
Fixed Interest Savings Certificates
These are basically fixed rate bonds issued in two and five-year terms and pay a fixed rate of interest for a fixed period of time.
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Emma Lunn is an award-winning freelance financial journalist who specialises in money and consumer affairs. She has more than 17 years’ experience writing for national newspapers, trade and consumer magazines, and specialist websites. She has a particular interest in writing about property and mortgages, and enjoys explaining complex issues in an easy-to-understand way.
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