More pain for savers as NS&I slashes ISA rates for thousands of people
A Government bank have delivered more pain for hundreds of thousands of savers by slashing rates on one of their top-selling products.
National Savings & Investments yesterday confirmed they would reduce the interest on their Direct ISA from one per cent to 0.75 per cent from September 24.
It comes months after they cut the amount people could put into their popular Guaranteed Growth or Guaranteed Income Bonds from £1million to just £10,000.
Experts predict NS&I, who run the Premium Bonds, could take an axe to other product rates.
It comes after the agency, who get money for the Treasury, saw their fund-raising target reduced from £8billion to £6billion this financial year.
As of March, 387,000 people held a total of £4.6billion in Direct ISA accounts.
NS&I said one reason for the cut was that the Treasury could raise money for less elsewhere.
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Jill Waters, NS&I retail director, said: “We have taken the decision to reduce the interest rate on our Direct ISA to deliver positive value for taxpayers.”
It comes as saving rates on best-buy accounts are creeping up.
The Bank of England could announce a rate rise – from 0.5 to 0.75 per cent – next month too. Susan Hannums, co-founder of advice site Savings Champion, said: “NS&I have wielded the axe on the rates on offer, which may not end here.
“This at a time when rates for new savers from the rest of the market are on the up.”
Sarah Coles, personal finance analyst at brokers Hargreaves Lansdown, said: “This is a blow to loyal NS&I savers but they had little choice in the matter.
“They have to maintain a difficult balance between offering reasonable rates to savers and not attracting so much cash that they overshoot their target.”
For advice on the best savings rates or ISA accounts right now, see our guide, here.
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