Savers will have more choice where to invest their cash by the end of the year with more green savings options coming onto the market. For a minimum investment of £100, savers will be able to go green this winter by buying NS&I Premium Bonds, which will be backed and looked after by HM Treasury and spent on green projects within two years.
Announced by Chancellor Rishi Sunak in this year’s Budget, this new type of savings account will allow British savers to put their savings to good use.
As part of the Government’s plans to meet net-zero carbon emission targets by 2050, the new green bonds will be used to fund environmentally-friendly projects.
Projects include building offshore wind farms, improving public transport and funding the UK’s move towards electric vehicles.
On its website NS&I said the Government chooses where the money will be best used. It stated: “HM Treasury then plans to allocate an amount equivalent to the proceeds raised from Green Savings Bonds, to its chosen green projects, within two years.”
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It added: “The Government will publish details about how the money is being spent and what the environmental benefits are, so you can see the difference you’re making.”
Those interested will be able to invest between £100 and £100,000 for a minimum period of three years.
As it’s a fixed-term, the money can’t be accessed during the three-year term so interested investors will need to have an emergency fund saved elsewhere.
And as it gets closer to the launch at the end of the year, intrigue is building.
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Although there’s still no set date for the launch, NS&I has updated the Green Savings Bonds guide on its website to let people know where the UK Government plans to spend the money.
Some of the funding will be spent on zero emission buses to help reduce harmful emissions caused by petrol and diesel vehicles and other transport.
There will also be a focus on projects that help the UK move away from a reliance on fossil fuels in favour of renewable energy, such as wind and solar power.
Money will also be allocated towards initiatives that prevent pollution, use energy in a more efficient way, protect natural resources and adopt climate change.
However, it’s still not known what the interest rate is likely to be, which could be a deal breaker for some.
Although British people want to support green initiatives when they can, people will be looking for a decent rate too, according to experts.
Laith Khalaf, financial analyst at AJ Bell, said: “The new NS&I bond the Chancellor is planning will give savers the option of a green home for their cash, but its success will likely be determined by the interest rate on offer.
“Savers showed they’re willing to vote with their feet when NS&I cut interest rates across a swathe of accounts last November, and if the green savings bond offers a paltry rate of interest, it might fail to ignite demand from the public.”
NS&I Chief Executive Ian Ackerley said: “We are delighted to be offering a new savings product on behalf of the Government and playing a key role in contributing towards the UK’s Green agenda.
“This exciting new Bond will be available to purchase from NS&I later this year.
“It will give UK savers the opportunity to contribute towards green projects to help make the world greener, cleaner and more sustainable.”
Experts believe that the interest rate could set the bar for other green savings accounts.