National Savings interest rates cut

NS&IHard-hit savers have been dealt another blow with Treasury-backed National Savings & Investments announcing cuts to interest rates on three products.

The rate on NS&I's popular tax-free direct ISA savings account, which had more than 300,000 customers in March last year, will reduce by 0.5% to 1.75% in September, having been cut from 2.5% in November last year.
There will also be a half a percentage point cut in the rate on NS&I income bonds to 1.25% and a 0.4% reduction in its direct saver rate to 1.1%. There were 209,000 NS&I income bond customers at the end of March last year, with 53,498 holding the direct saver account.

NS&I, whose remit is to have rates which reflect but do not lead the market, said the moves are in line with the wider trend for rates to be lower.

It represents more bad news for savers after reductions by a number of other banks and building societies and as pension savers suffer diminishing returns due to the Bank of England's quantitative easing scheme.

Download these free guides on investing and savings here: Financial research group Moneyfacts said savers are "fighting a losing battle" since the launch of the Government's Funding for Lending Scheme which gives banks access to cheap funding and has meant they are no longer as reliant on the deposits of savers.

It pointed out that NS&I's direct ISA account was currently paying the third best cash ISA rate at 2.25%, but at 1.75% is no longer a best-buy deal.

Moneyfacts spokeswoman Rachel Springall said: "NS&I are following the trend of rate reductions. However, they are a trusted brand so savers will need to decide whether to sacrifice a best-buy deal to save with them or opt for a better paying account elsewhere. As the changes will not be made until September there is no knowing until that stage whether the savings market would have deteriorated further and these deals become more attractive. The positive side of this news is that savers have time to decide to switch or not."

Unlike banks and buildings and societies which are covered for up to £85,000 by a scheme to compensate customers, NS&I is able to guarantee 100% of deposits because it is backed by the Government.

Its chief executive Jane Platt said: "Rates across the savings market have fallen over recent months and to ensure we continue to strike a balance between the needs of our savers, taxpayers and the stability of the broader financial sector, we have taken the difficult decision to reduce the rates on our direct ISA, direct saver and income bonds accounts."

10 wealthiest small towns in the UK
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National Savings interest rates cut

Windsor is top of the tables for the UK's wealthiest towns and villages, according to research published by WealthInsight. The Berkshire town is home to 850 dollar millionaires (people with assets of more than US$1m, or £653,424)


Weybridge is second in England with a population of 19,500 and 800 to 850 millionaires.

Sevenoaks has a population of 18,500 and between 800 to 850 millionaires.

Andrew Amolis, analyst at WealthInsight said Beaconsfield's position, at number four, was "unsurprising." "It has the highest average house price outside of London (over US$750,000 per home). It also has the highest average income per household of US$110,000."

Henley-on-Thames, at number five on the list, is the town where numbers of millionaires is growing fastest, the research suggests. The number of so-called high net worth individuals increased by 25% between 2007 and 2012. "This compares very well with general UK millionaire numbers which declined by 9% over that period," said Andrew Amolis, analyst at WealthInsight.

Marlow just missed out on a top five rank with 14,000 inhabitants and between 350 and 400 millionaires in residence.

Hale is the highest-rated town closest to Manchester with a population of 15,300 and between 300 and 350 millionaires.

"Alderley Edge is considered to be the most affluent town in the North West, particularly Whitebarn Road which is one of the most expensive streets in the UK," said Andrew Amolis, analyst at WealthInsight.

Bray is number nine on the list and is home to Heston Blumenthal's Fat Duck restaurant. Bray has a population of 4,600 and counts more than 300 millionaires among its residents.

Ascot finishes tenth in the list with a population of 11,600 and between 250 to 300 millionaires.


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