Interest rate cuts blow for NS&I savers

Finance: Changes in effect from May TV: Back on duty

NS&I has announced a raft of interest rate reductions across its products in a blow to savers.

The Treasury-backed giant, which has a duty to balance the needs of savers, taxpayers and the wider market, said the changes will take effect from May.

They include making the Premium Bonds prize fund rate less generous. The odds of any £1 bond number winning any prize will drop from 24,500/1 to 26,000/1 from May’s draw.

Around 173,718 fewer

Premium Bond prizes will be handed out in May compared with February.

It means, for example, there will be five £100,000 prizes up for grabs in May, down from six in February.

And there will be around 13,448 £100 prizes on offer in May, down from 27,221 in February, NS&I said.

Meanwhile, from May 1, NS&I’s Direct Saver rate will be cut from 1% to 0.7% and the Investment Account rate from 0.8% to 0.6%.

Various bond rates are also being chopped, including Guaranteed Growth Bonds and

Guaranteed Income Bonds.

NS&I said customers holding Guaranteed Growth Bonds, Guaranteed Income Bonds and Fixed Interest Savings Certificates, and whose investments mature on or before June 1 and who automatically renew into a new issue of the same term, will receive the previous, higher interest rate.

But customers renewing into a new issue but a term of a different length will receive the reduced interest rate. NS&I said the changes will ensure it is positioned appropriately against its competitors.

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