Got an NS&I savings certificate? You'll earn less if you renew from today

National Savings & Investments (NS&I) savings certificates are products designed to protect your money from inflation. They haven't been available to new customers since 2011, but if you already have one you can carry on renewing it. Over 500,000 customers still have them. 

On each anniversary of the certificate being taken out, NS&I adds money to your savings based on the inflation rate of that year, known as 'index-linked growth', as well as a token interest rate of 0.01% on top.

And up until now, it's used the Retail Prices Index (RPI) inflation measure to work out how much to pay you. But for certificates that renew from 1 May 2019, it's switching to the Consumer Prices Index (CPI) measure, which tends to be a lower rate.

For example, in January 2019, RPI was 2.5%, while CPI was 1.8%. According to NS&I's calculations, under these rates a customer with a £1,000 five-year savings certificate would lose £38 over its term as a result of the switch to CPI.

From the point your certificate renews at the lower rate, you'll have a 30-day cooling-off period to cash it in. After this, you'll pay a penalty to get your money back early – so it's worth checking when your certificate renews. 

What are index-linked savings certificates?

NS&I savings certificates are essentially a fixed-term savings product, where you buy certificates worth between £100 and £15,000. 

You can choose whether you want the certificate to last for two, three or five years. Your money will be locked away for as long as the certificate lasts – if you cash it in early, you'll pay a penalty of 90 days' interest and won't earn any index-linked growth for that year, even if you only cash in part of the certificate. 

Every year on the anniversary of your certificate being bought or renewed, you'll be paid index-linked growth based on how much inflation there's been over the year, as well as a fixed interest rate of 0.01%.

NS&I measures what the inflation level was two months before the anniversary – so if your certificate renews in May 2019, what you'll be paid next year will be based on the inflation rate in March 2020. 

When will my rates drop?

If you've got a certificate now that was renewed on or before 30 April 2019, you won't see any change to your growth rates during the certificate's term. 

But if it's renewed on or after 1 May 2019, the rates will be calculated using the lower CPI measure. 

You should hear from NS&I about a month before your certificate matures, letting you know your options, which include renewing your certificate for a different length of time or cashing it in. 

But remember, if you don't do anything your certificate will automatically renew for another term of the same length – and you'll only have a 30-day window after renewal to cash it in without paying a penalty (you don't have this right to cancel if you opt to renew your certificate for a different length of time). 

So it's worth checking when your certificate is due to renew, and remember to cash it in then if you don't want it to auto-renew. If you're not sure when this is, call NS&I on 08085 007 007.

Are savings certificates still worth it?

If your savings certificate is set to renew on or after 1 May 2019, you'll see a significant drop in earnings – and at current rates, you could expect to earn less than you would if you put the money in a top fixed-rate savings account.

The most recently published CPI figure, for March 2019, stood at 1.9%. Meanwhile, the top two-year fix currently pays 2.3%, while the top five-year fix pays 2.6%. You can find the best fixed-rate accounts in our Top Savings guide. 

However, remember that the amount you actually earn from a savings certificate will depend on what the CPI rate is during the term of the certificate, not what the rate is now, so it's difficult to compare accurately.

And depending on your situation, NS&I certificates could have some advantages over other fixed-term savings products: 

• Your money will be protected from inflation rises. Whether you'll actually earn more from your cash with a savings certificate or fixed-term account will depend on what happens to inflation rates over the next couple of years.

  If inflation stays roughly steady, only rises slightly or decreases, you'll have been better off with a fixed-term savings account as this pays a higher rate.

  But if inflation increases rapidly and ends up at a rate that is higher than the current top fixed savings rate, you'll lose out with a fixed-term account – your money will technically be decreasing in value, as the interest you're paid will be less than inflation. 

  While savings certificates currently have a lower rate, you'll have the guarantee that your earnings will never slip below inflation. 

• Any money you earn on the account is paid tax-free. This won't make a difference to most, as the personal savings allowance lets you earn a certain amount in savings interest tax-free – there's full info in our Personal Savings Allowance guide.

  But if you've got large savings that earn enough interest to take you over the personal savings allowance, putting some in a savings certificate will cut the tax you pay.