NS&I reduces interest rates on variable savings offers

NS&I (National Savings and Investments) is decreasing the interest rates on most of its variable savings offers by up to 0.50% per annum.

This decrease follows the movement in the Bank of England base rate on 8 October 2008, from 5.00% to 4.50%, which has a bearing on NS&I's variable rate products. The revised interest rates will come into effect from 22 October 2008 on some of its variable rate products. The interest rate of its Direct ISA decreased on 8 October 2008, while Premium Bonds will take effect from 1 November 2008 and Income Bonds from 6 November 2008.

Premium Bonds

The Premium Bond prize fund rate will decrease from 3.25% p.a. to 2.85% 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 number will change to 24,000 to 1 (previously 22,000 to 1). This means that someone with the maximum £30,000 invested could, with average luck, win 15 prizes a year. The prize band split between lower, medium and higher value prizes will see a slight change.