National Savings

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National Savings

These are investments offered by the government and run by the Department for National Savings.

National Savings ordinary account. This is a savings account that gives you limited immediate access to your money. A small amount of interest each year is tax­free, which could be useful for higher-rate taxpayers, but overall the ordinary account is of limited use because the rate of interest paid is very low.

The type of interest returned, is variable, and a higher rate is paid if the balance is £500 or more and if you've had the account for at least a year. The interest is credited to your account annually.

Capital is not at risk, but is vulnerable to falling interest rates. Risk rating: one.

National Savings certificates are Two-year or five-year-term investment producing a guaranteed tax-free return, which makes them attractive for taxpayers, especially those paying at the higher rate.
The minimum investment for them are £100, whereas the maximum investment is £10,000 in the current issue, plus a further unlimited amount if you are reinvesting the maturity proceeds of an earlier issue. This is in addition to holdings of previous issues.

The interest returned is fixed and paid out at the end of the two-year or five-year term or on earlier encashment. The rate of interest increases each year you hold the certificates.

Capital is not at risk but is vulnerable to inflation, and because you are locked in at a fixed rate, you'll lose out if other interest rates rise. Risk rating: three.

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