National Savings Direct Saver account cuts rate by 0.25%

Wednesday, 25 January 2012 09:40

NS&I has announced today (January 25th 2012) that it is cutting the interest rate on its Direct Saver account after revealing that it expects to surpass its Net Financing target this year.

The interest rate will decrease by 0.25 per cent a year from 1.75 per cent to 1.5 per cent, which NS&I says will balance the needs of taxpayers, savers and the wider economy.

It explained that it has a target of delivering £2 billion of net financing in 2011-12, but is on target to generate £4.5 billion.

Therefore, NS&I has decreased its Direct Saver rates to reduce the amount of money being placed in this kind of account.

Spokesperson Jane Platt commented: "Reducing the rate on Direct Saver was a very difficult decision. However, we have to take action to try and moderate the level of deposits into this account over the coming months."

NS&I states that it delivered £70 million of savings to the taxpayer in the third quarter of 2011-12.

Adrian Coles from the Building Societies Association told BBC News he is pleased with the announcement, as it believes NS&I has had an unfair advantage when it comes to attracting funds from savers since 2007.

He added that this could be holding back mortgage availability because other building societies are unable to raise the funds they need.

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