NS&I is slashing interest rates next month – full list of products affected

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NS&I announced reductions to the interest rates on a whole number of its savings products last month, with these being due to come into effect in November 2020. It comes following months of the government-backed savings provider featuring high on the best buy tables for various savings products, including easy access savings options.

In July this year, NS&I’s Net Financing target for 2020-21 was revised from £6billion (+/- £3 billion) to £35 billion (+/- £5 billion), to reflect the Government’s funding requirements due to the Covid-19 pandemic.

NS&I has said that in Q1 of 2020-21 (spanning April to June), it saw inflows of £19.9billion and delivered £14.5billion of Net Financing.

During Q2 (July to September), demand for NS&I products has remained at similarly high levels, the savings provider said.

Ian Ackerley, NS&I Chief Executive, said last month: “Reducing interest rates is always a difficult decision.

“In April we cancelled interest rate reductions announced in February and scheduled for May 1.

“Given successive reductions in the Bank of England base rate in March, and subsequent reductions in interest rates by other providers, several of our products have become ‘best buy’ and we have experienced extremely high demand as a consequence.

“It is important that we strike a balance between the interests of savers, taxpayers and the broader financial services sector; and it is time for NS&I to return to a more normal competitive position for our products.”

The interest rate changes will be effective from November 24, 2020.

Premium Bonds

Premium Bonds holders will also be affected, as the prize fund rate will be reduced by 40 basis points, from 1.40 percent to 1.00 percent.

As such, this means the odds of winning per £1 Bond number will change from 24,500 to one, to 34,500 to one.

This particular change will apply from the December 2020 draw.

The Premium Bonds prize fund rate will also be reduced and apply from the December 2020 draw.

To find out details of local deals in your area, please fill in your postcode below.

Variable rate savings products

Direct Saver

Currently: 1.00 percent gross/AER

From November 24 2020: 0.15 percent gross/AER (-85 basis points)

Investment Account

Currently: 0.80 percent gross/AER,

From November 24 2020: 0.01 percent gross/AER (-79 basis points)

Income Bonds

Currently: 1.15 percent gross/1.16 percent AER

From November 24 2020: 0.01 percent gross/0.01 percent AER (-114/115 basis points)

Direct ISA

Currently: 0.90 percent gross/AER

From November 24 2020: 0.10 percent gross/AER (-80 basis points)

Junior ISA

Currently: 3.25 percent gross/AER

From November 24 2020: 1.50 percent gross/AER (-175 basis points)

Fixed term savings products

Next month, on November 24, NS&I is to reduce the rates it offers for fixed term investments with the reductions ranging from 90 to 115 basis points.

Those with current holdings will not see changes until they mature, and customers do not need to take action now, NS&I said.

Guaranteed Growth Bonds (1-year)

Currently: 1.10 percent gross/AER

From November 24, 2020: 0.10 percent gross/AER (-100 basis points)

Guaranteed Growth Bonds (2-year)

Currently: 1.20 percent gross/AER

From November 24, 2020: 0.15 percent gross/AER (-105 basis points)

Guaranteed Growth Bonds (3-year)

Currently: 1.30 percent gross/AER

From November 24, 2020: 0.40 percent gross/AER (-90 basis points)

Guaranteed Growth Bonds (5-year)

Currently: 1.65 percent gross/AER

From November 24, 2020: 0.55 percent gross/AER (-110 basis points)

Guaranteed Income Bonds (1-year)

Currently: 1.05 percent gross / 1.06 percent AER

From November 24, 2020: 0.06 percent gross / 0.06 percent AER (-100 basis points)

Guaranteed Income Bonds (2-year)

Currently: 1.15 percent gross / 1.16 percent AER

From November 24, 2020: 0.11 percent gross / 0.11 percent AER (-115 basis points)

Guaranteed Income Bonds (3-year)

Currently: 1.25 percent gross / 1.26 percent AER

From November 24, 2020: 0.36 percent gross / 0.36 percent AER (-90 basis points)

Guaranteed Income Bonds (5-year)

Currently: 1.60 percent gross / 1.61 percent AER

From November 24, 2020: 0.51 percent gross / 0.51 percent AER (-110 basis points)

Fixed Interest Savings Certificates (2-year)

Currently: 1.15 percent tax-free/AER

From November 24, 2020: 0.10 percent tax-free/AER (-105 basis points)

Fixed Interest Savings Certificates (5-year)

Currently: 1.60 percent tax-free/AER

From November 24, 2020: 0.50 percent tax-free/AER (-110 basis points)

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