NS&I savings rate fall
Monday, 13 Oct 2008 12:44
National Savings and Investment (NS&I) has reduced the interest rates on a number of savings.
The decrease in rates by up to 0.20 per cent means the Premium Bond prize fund rate will fall from 3.40 per cent per year to 3.25 per cent.
The change, which happened last week and affected some of NS&I's variable savings offers, occurred because the organisation noticed an increase in sales volumes, as savers worried about the banking crisis put money with NS&I aware of its government-backed 100 per cent guarantee.
It said: "NS&I's strategy is to add value for its stakeholders. The changes aim to support NS&I in meeting its annual net financing remit, maintain a consistent level of market share and to provide a positive savings experience for its customers."
Over one million tax-free Premium Bond prizes, which are free of income and capital gains tax, would continue to be paid out each month, the organisation said.
The 3.4 per cent prize fund rate previously in place meant the total value of prizes was over £104 million. The new 3.25 per cent rate reduces the total value to just over £100 million.