Relief for savers as NS&I drops plans to cut rates on some products

Savings giant NS&I has ditched some plans to make products less generous, including previously announced changes to Premium Bonds.

The Treasury-backed provider, which offers a range of savings and investments products to 25 million customers, said the cancellations to its planned rate reductions will help support savers during the coronavirus pandemic.

Variable interest rate changes announced on February 17 will be cancelled and customers should disregard letters about them, it said.

The announcement may bring a bit of relief to savers, with the Bank of England base rate currently sitting at just 0.1% and many providers having slashed returns on savings pots.

But NS&I (National Savings and Investments) said cuts to fixed-term products, also announced in February, will still go ahead from May 1.

Among the planned changes which have now been scrapped, the Direct Saver will not fall from 1% interest to 0.7%, the Investment Account will not fall from 0.8% to 0.6% and Income Bonds will not fall from 1.15% to 0.7%.

The Premium Bonds prize fund rate will remain at 1.4% – with a planned reduction to 1.3% now cancelled.

It means the odds of any £1 Bond number winning any prize will remain at 24,500 to one, rather than the planned reduction in odds to 26,000 to one.

Guaranteed Growth Bonds, Guaranteed Income Bonds and Fixed Interest Savings Certificates will still see rates fall from May 1. For example, the interest rate on one-year Guaranteed Growth Bonds will decline from 1.25% to 1.1%.

Customers holding Guaranteed Growth Bonds, Guaranteed Income Bonds and Fixed Interest Savings Certificates and whose investments mature on or before June 1 and who automatically renew into a new issue of the same term, will receive the previous, higher interest rate.

However, any customers who choose to renew into a new issue but a term of a different length will receive the reduced interest rate effective from May 1.

Current holdings will be unchanged until they mature and customers do not need to take action now. NS&I will write to all holders of Guaranteed Growth Bonds, Guaranteed Income Bonds and Fixed Interest Savings Certificates at least 30 days before the end of their term.

NS&I is also urging customers to go online to nsandi.com if they wish to invest or if they need help to manage their savings during the coronavirus pandemic.

This will help it to free up contact centre capacity for those customers who need to access it most. Customers should also only send NS&I anything by post if they have no other choice.

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