Abundance is urging low risk investors to consider the community municipal investments (CMIs) offered on its platforms as an alternative to NS&I products.
The crowd bonds platform is arguing that CMIs provide a lower risk investment that can be a better alternative to keeping money in poorly paying cash savings or products with NS&I accounts.
Cash savings rates are currently at record lows and the government-backed NS&I offers the best market rates at the moment of 1.4 per cent on its premium bonds or 1.15 per cent on its income bonds.
In contrast, the West Berkshire CMI currently being offered through Abundance has a rate of 1.2 per cent per year for five years.
The CMIs help investors fund local environmentally-friendly projects.
Other councils are also planning launches.
Abundance pointed out that the CMI return is more certain than what is on offer from NS&I, as its rate is variable.
“Looking at NS&I specifically it is also important to consider where their market leading rates actually come from,” the platform said in a blog on its website.
“As they are government-backed investments, any premium on the rates offered by NS&I is actually coming from the taxpayers’ pocket.
“For this reason, NS&I has an affordability test, which sets the amounts the government wishes to borrow in a given period, and the rates that should be offered to savers.
“NS&I rates were supposed to decrease in May but the change was postponed by the Treasury due to the pandemic.
“It remains to be seen how long that premium can be sustained.”