Philip Hammond on Wednesday (8 March) confirmed that the new National Savings and Investments (NS&I) bond, which will have a three-year term, will offer an interest rate of 2.2 per cent.
The maximum investment limit, however, is low at £3,000. Savers who invest the full amount will pocket £66 a year before tax.
The investment limit of £3,000 is not exactly going to make a huge difference to people who can already get 2.2 per cent on a three-year savings product with Atom Bank and 2 per cent with Secure Trust Bank.
It's not as 'market-leading' as the chancellor indicated that it would be in the Autumn Statement, when the top rate on a three-year bond was 1.2 per cent.
Mr Hammond had previously announced in the Autumn Statement that, like NS&I's popular Pensioner Bonds, which launched at the start of 2015, the bonds will be open to everyone aged 16 or over.
The bond will be subject to a minimum investment limit of £100 and will be available for 12 months from April 2017.
It is unclear at this stage how many bonds NS&I will be able to sell. But in the Autumn Statement, Mr Hammond seemed to suggest there shouldn't be problems on the supply side, stating that he 'expects around two million people to benefit'.
The new bond brings at least some positive cheer to the savings market. Over the past couple of years there has been a slew of cuts, with major banks and building societies cutting rates to the bone.
With the spectre of inflation returning in 2017 and predicted to hit 4 per cent towards the end of next year, the landscape is going to become even tougher for savers.
This article was written for our sister website Moneywise.
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