How is NS&I reducing rates?
Here’s a quick recap of the main changes that have been announced – we’ll update this story in due course with all the details and analysis:
- NS&I will reduce variable rates, including ISAs, starting November 24, 2020. The rate on its income bonds will drop from 1.16% to just 0.01% AER, and its Direct Saver account will drop from 1% to just 0.15% AER. The rate on his investment account will also drop from 0.80% to 0.01% AER.
Its Junior ISA will only pay 1.5% AER, compared to 3.25%, while Direct ISA will drop from 0.9% to 0.1% AER.
- He also announced reductions in certain fixed interest rates on savings, again from November 24, 2020. The rate on its one-year guaranteed growth bonds, for example, will drop from 1.1% AER to just 0.1% AER, while its one-year guaranteed income bonds will drop from 1.06% AER to 0. , 6% AER.
- The premium bond price rate will drop from 1.4% to 1% in December. At the moment, the reward rate for premium bonds is 1.4% – so every £ 1 bond has a 1 in 24,500 chance of winning a prize. But from the December 2020 Premium Bond draw, the odds will drop to 1 in 34,500, with more than a million fewer prizes due out in December than in September.
NS&I, which manages premium bonds, had planned to cut the reward rate to 1.3% earlier this year, but it reversed the cut – along with planned cuts to its variable savings products – to support the savers during the pandemic.
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