National Savings and Investments (NS&I) has cut rates on its fixed savings bonds, less than two months after giving them a boost.
But the government-backed operator isn’t the only provider cutting interest. Average rates on all instant-access and fixed-term savings bonds dropped between December and January.
With cash returns dwindling, here are our top tips to beat the savings slump and ensure your nest egg is working as hard as possible.
NS&I cuts rates on fixed bonds
In November 2025, NS&I surprised many savers by boosting interest on its range of fixed-term deals – despite rates dropping across the savings market. But savers looking to open an account in the new year have been dealt a blow, after the provider cut rates to levels similar to before the autumn hike.
NS&I offers two types of fixed-term savings account. Guaranteed Growth Bonds pay interest annually, and Guaranteed Income Bonds pay returns into savers’ nominated current accounts every month. Both allow you to invest between £500 and £1m.
This table shows the accounts ordered by term:
What’s the difference between gross and AER?
Like many providers, NS&I lists rates using the terms gross and AER. The former is best understood as the flat rate of interest that’s actually paid, while the latter takes into account the effect of compounding – the snowball effect of income earned from interest growing together with your original investment.
Understanding the difference between gross and AER matters when it comes to income bonds. Because returns are paid out into your nominated bank account every month, interest isn’t compounded.
The lower gross rate that NS&I quotes for those products is therefore a more accurate reflection of the amount of savings income earned over the course of a year.
NS&I is unusual in formally separating its fixed-term bonds by how they pay out. With most providers, it’s the same account, and you make the decision of how interest will be paid when you apply. So when choosing, consider if you really need interest paid out, and whether it’s worth it.
- Find out more: best savings rates 2026
6 ways to beat falling savings rates
NS&I isn’t the only provider cutting rates recently. A number of banks and building societies have axed their top rate deals following last month’s decision by Bank of England to reduce the base rate to 3.75%.
Moneyfacts data shows the average instant-access rate fell from 2.52% AER to 2.48% in the month to 1 January. The average one-year rate went down from 3.92% to 3.85% over the same time period, while the average rate for a bond lasting more than 12 months fell from 3.84% to 3.8%.
With rates expected to continue falling in 2026, what can you do to ensure your money is still working as hard as possible?
1. Review and switch
It’s vital to regularly review your savings and check you’re getting the best rate possible.
Even when rates fall on average, some will remain more competitive than others. At the very least, you should make sure interest is above the current CPI figure of 3.2%. If your rate is lower than inflation, your savings will lose value in real terms.
This table shows the top instant-access and fixed-rate savings accounts, ordered by term:
Table notes: rates sourced from Moneyfacts on 7 January 2026. No providers in this table had a sample size large enough for us to generate a provider customer score. (a) 5% AER on balances up to £3,000 for 12 months, after which funds transfer to a Cahoot Savings Account at 1%.
- Find out more: how to switch your savings account
2. Lock in for longer
A smart move may be to lock in a top interest rate now before rates drop any further. The question is: how long should you fix for?
One-year bonds offer the best returns, our analysis of Moneyfacts data shows. The top deal on 7 January was 4.33% AER from Union Bank of India (UK).
Fixing for longer provides peace of mind that your nest egg will be protected from the impact of falling rates. The longest bond offered by most providers is usually five years. The best deal for a five-year account is currently 4.31% AER from Hampshire Trust Bank.
It can be possible to lock your cash away for as long as seven years. We found only four banks that offer this option – Isbank, Shawbrook Bank, Bank of London and The Middle East, and UBL UK – and all offer below-average rates.
- Find out more: what are the different types of savings accounts?
3. Be less flexible
With variable-rate products, most of the best deals come with caveats. Our latest analysis of Moneyfacts data found seven of the top 10 instant-access accounts feature restrictions.
One common catch is requiring savers to be an existing customer of the bank or building society before they can open the account. This usually means having a current account but, in some cases, other products such as a mortgage or investment account may also qualify.
Market-leading deals may also limit the number of withdrawals that savers can make in exchange for a higher rate of interest.
Others, such as Cahoot’s chart-topping 5% account, offer a high introductory rate that drops significantly after a set period of time, usually 12 months.
- Find out more: do current accounts offer good interest rates?
4. Compound any interest
Compound interest is when your earned interest is added to your balance – helping you earn even more over time.
The sooner you start saving, the longer your money has to benefit from compounding. So don’t wait around for better rates if you’ve got money ready to save now.
5. Use a savings platform
A savings platform is a handy online tool that enables you to open and switch between multiple accounts with a single login, without having to fill out a new application each time.
Deals available on savings platforms are often exclusive and some platforms will also alert you when a better rate becomes available.
But watch out for those that charge a fee. This is sometimes taken as a cut of the interest rate before it’s displayed, or deducted as a percentage of your balance.
- Find out more: what is a savings platform?
6. Take advantage of Isa season
There’s a limit to how much interest you can earn on your money before you face a tax bill. This is called the Personal Savings Allowance. If you have a large sum to reinvest, opening a cash Isa can currently help you shield up to £20,000 a year from the claws of HMRC.
The end of the tax year – and the start of a new one – often prompts providers to launch competitive Isa deals. So look out for better rates between February and April.
Remember, the annual cash Isa limit will be cut to £12,000 for savers under 65 from 2027. You can still keep the full £20,000 allowance, but only if £8,000 of it is held in an investment Isa.
Using the full £20,000 allowance while it remains in place is your best bet to protect more of your savings from income tax.
- Find out more: best cash Isas 2026