The world’s first green savings bond is now on sale with NS&I — but with one of the worst rates on the market.
Savers will be paid interest at just 0.65pc if they invest in the three-year fixed bonds to bankroll environmentally-friendly Government projects. There are more than 80 savings accounts that pay higher interest.
The Bank of England is expected to raise interest rates soon. Laura Suter from AJ Bell’s personal finance department says that the paltry rate will likely drop ‘like a lead ball’.
The world’s first green savings bond is now on sale with NS&I — but with one of the worst rates on the market
She adds £10,000 invested in the new green bonds would return £196 — more than £350 less than the top-paying equivalent account that pays 1.81pc. She said, “This equation makes less sense now that the nation is looking down at the barrel of an interest-rate rise from the Bank of England. This will lead to a rise in savings rates.
‘Many had hoped that NS&I would leap to the top of the league tables with the new product and they could have a triple win: a great rate, a Government-backed product and putting their money to greener use. However, this is not the case.
The Treasury states that the bonds, which were announced in the Budget in March, will be used to finance green spending on schemes such as renewable energy and green transport. According to the Treasury, research showed that 42 percent of 18-34-year-olds would be willing to accept a lower return on savings if it was used for green projects.
Rishi Sunak, Chancellor of India, said: “Our world-first green savings bonds allow savers in the UK to support the Government’s green projects. They can also put their money towards fighting climate change.”
The green bonds will be on sale online with NS&I for at least three months, with savers able to lock away between £100 and £100,000. Sarah Coles from investment service Hargreaves Lansdown is a personal finance analyst. She says the only attraction for savers lies in the ability to use their money to do good and that it is protected by the Treasury.
She said:[The rate]This is a huge disappointment for savers looking for accounts that would do the right things for the planet and their pockets.
Gatehouse Bank’s three year fixed Green Saver account pays 1.78pc and plants one tree for every customer. This is a great opportunity for those who care about the environment. Rachel Springall, of finance data firm Moneyfacts, says: ‘The positive side is that NS&I is a trusted brand and there will be savers attracted to them as a safe haven. “There may be less of an overcrowding and more gradual take-up for these bonds,” Springall said.