NS&I Direct ISA interest rate rises

The interest rate paid on National Savings and Investments' Direct ISA will rise from 5.55% per annum to 5.80% following today's increase in the Bank of England base rate by 0.25%.

The new higher rate becomes effective from today and is guaranteed to be at least 0.55% above base rate until 5 April 2008 at the earliest.

NS&I's Direct ISA was launched on 6 April 2006 and is available online and by telephone only.

Direct ISA customers can invest up to £3,000 each tax year, carry out balance checks, look at their transaction history and make withdrawals online 24 hours a day and by phone between 7 a.m. and midnight, seven days a week.

And the Direct ISA comes with the 100% capital guarantee which NS&I can offer because all of its savings and investments are backed by HM Treasury.

Direct ISA key features

Invest online and by phone only with a debit card
Interest rate guaranteed to be 0.55% above base rate until at least 5 April 2008
Consistent interest rate: no short-term introductory bonus
Convenience of opening and managing account online and by phone
Minimum deposit: £1,000
Minimum further deposit: £250 (or £100 by standing order)
Withdrawals: apply online or by phone
Minimum withdrawal: £250 to nominated bank account
All interest free of UK income tax
Direct ISA is open to new customers and those who had opened an NS& I Cash mini ISA by 5 April 2006, but it is not be possible to transfer into NS&I's Direct ISA from any other ISA provider.