NS&I slashes rates!

Investors have seen no shortage of interest rate cuts this year, following the Bank of England Base Rate being reduced to 0.1% in March this year – an all-time low. In September, NS&I announced their own rate reductions, with cuts due to come into force on November 24th.

The surprise announcement will come as an enormous disappointment to savers, many of whom have turned to NS&I as savings rates have plummeted during the pandemic. In recent months, the NS&I’s Income Bond, which currently pays 1.16% AER, had been featured as one of the market-leading easy access savings products by various financial comparison websites. In June, the money savings expert website reported that Premium Bonds had hit a 14-year record.

Here we have prepared a quick overview of the key NS&I rate cuts:

Variable savings rates and ISAs 

NS&I’s Income Bonds account is tumbling from 1.16% to just 0.01% AER, while the Direct Saver account will drop from 1% to 0.15% AER.

The Junior ISA will drop to 1.5% AER, down from 3.25%, while the Direct ISA will drop from 0.9% to 0.1% AER.

Fixed savings rates 

A range of accounts will see rates drop sharply. NS&I’s one-year Guaranteed Growth Bonds will drop from 1.1% to just 0.1% AER. Its one-year Guaranteed Income Bonds will also drop from 1.06% to 0.06% AER. However, there is some good news – these rates will not affect your current bonds and will only drop should you choose to renew.

Premium Bond prize rate

Currently, the prize rate for Premium Bonds is 1.4% – this means that a £1 bond has a 1 in 24,500 chance of winning a prize. However, from the December 2020 Premium Bond prize draw, the odds will be lowered to 1 in 34,500, with over one million fewer prizes to be won.

For any help or advice with Investments, Savings or Financial Planning, give us a call on 01733 314553 or email us at info@brookswealth.co.uk.