In November, hundreds of thousands of customers will have the interest rates of their government backed savings accounts cut by 0.25%. This cut will be carried out on its tax exempt Individual Savings Account and will take the interest rate down to 1.25%.
The reason that this has to happen is the fact that there are government rules in place to make certain that NS&I do not damage the competitiveness of the rest of the market. There has been a large amount of cash deposited into these accounts recently due to their market leading rates.
Their Direct ISA has seen deposits of over £800m every year that are coming from customers seeking to make a decent amount of money on their savings. These accounts come with the added benefit of being able to offer complete security as a result of the government’s guarantee.
There was an even more noteworthy development in the form of the increasingly well-liked Pensioner Bonds and the limit for Premium Bonds going up to £50,000.
The chief executive of NS&I, Jane Platt, stated that this was a “difficult decision” to make but they need to “strike a balance between the needs of our savers, taxpayers and the stability of the broader financial services sector”.
This interest rate fall will come as of 16 November and will affect £3.8 billion of people’s savings.
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