Savings giant NS&I has hiked a rate on its Green Savings Bonds.

The Treasury-backed provider said the new issue of its three-year bond pays 4.73% AER (annual equivalent rate), having increased from a rate of 4.45% offered previously.

Launched in 2021, Green Savings Bonds enable savers to help fund green government projects.

The minimum investment in Green Savings Bonds is £100, with a maximum limit of £100,000 per person for each issue.

Investors need to be aged 16 or over to purchase the bonds. Deposits will be held for three years and cannot be withdrawn during the period.

Andrew Westhead, NS&I retail director, said: “Green Savings Bonds provide savers with guaranteed returns while supporting green government projects across the UK.”

Green Savings Bonds are separate to NS&I’s net financing target, which is set by the Treasury each year.

Sarah Coles, head of personal finance at AJ Bell, said that rising savings rates had been “leaving Green Savings Bonds in the dust”.

She said other options were available at higher rates, adding: “Today’s rise still puts these products some way behind the NS&I British Savings Bonds, offering 5.1% over this period.”