NS&I reduces rates on variable savings offers

National Savings and Investments (NS&I) is decreasing the interest rates on its variable savings offers by up to 0.25% per annum.

This decrease follows the movement in the Bank of England base rate on 10 April 2008, from 5.25% to 5.00%, which has a bearing on NS&I's variable rate products. The revised interest rates will come into effect on 23 April 2008 for all variable rate products, with the exception of the Direct ISA which was decreased on 10 April 2008, Premium Bonds which will take effect from 1 May 2008 and Income Bonds from 6 May 2008.

Premium Bonds

The Premium Bond prize fund rate will decrease from 3.60% p.a. to 3.40% p.a. NS&I will continue to pay out over one million tax-free Premium Bond prizes each month, including two £1 million jackpot prizes. Any prizes won are free from UK Income Tax and Capital Gains Tax.

The odds of winning a prize with each £1 Premium Bond will change to 22,000 to 1 (previously 21,000 to 1). This means that someone with the maximum £30,000 invested could, with average luck, win 16 prizes a year. The prize band split between lower, medium and higher value prizes will remain the same.