NS&I reduces interest rates on variable rate savings

NS&I (National Savings and Investments) is reducing the interest rates on its variable rate savings offers by up to 1.50% per annum following the movement in the Bank of England base rate by 1.50%. The rates on NS&I's fixed-rate savings will remain unchanged.

The Bank of England base rate reduced on 6 November 2008 from 4.50% to 3.00%. This has a bearing on NS&I's variable rate savings, consequently revised interest rates will come into effect from 19 November 2008. The new Premium Bonds prize fund rate, which will reduce by 1.05%, will take effect from 1 December 2008 while the rate on Income Bonds, which will reduce by just 1.30%, will take effect from 19 November 2008. The interest rate of its Direct ISA decreased on 7 November 2008.

Premium Bonds

The Premium Bond prize fund rate will now be 1.80% p.a. NS&I will continue to pay out two £1 million jackpot prizes each month, in addition to other tax-free 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 36,000 to 1 (previously 24,000 to 1). This means that someone with the maximum £30,000 invested could, with average luck, win 10 prizes a year.