The much anticipated Pensioner bonds from National Savings & Investments (NS&I) were launched last Thursday (16 Jan) but the unprecedented demand caused the NS&I website to crash.
The bonds offer two choices for savers aged 65 plus – a one-year Guaranteed Growth Bond paying 2.8% AER before tax (2.24% net of 20% tax) and a three-year bond paying 4% AER (3.2% after basic rate tax).
Interest is paid on maturity for the one-year bond and annually on the three year option. The minimum amount that can be deposited is £500 and the maximum £10,000 per person and the bonds can be held by an individual or jointly by couples.
In the first two days £1.15 billion worth of bonds had been snapped up – more than 10% of the total £10 billion of funds available under this government initiative.
Money expert Andrew Hagger of Moneycomms.co.uk said: It just shows how much pent up demand there is for decent savings rates – with standard savings accounts offering such miserly returns I expect demand to remain high and these bonds to sell out within the next three or four weeks.”
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