Savers issued ‘stark reminder’ as NS&I slashes interest rates including on Premium Bonds

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Among the savings products affected by the changes are Premium Bonds. The annual prize fund rate has now reduced by 40 basis points from 1.4 percent to one percent variable.

This means the odds of winning per £1 Bond number have changed from 24,500 to one to 34,500 to one.

The new odds will be effective from the December 2020 prize draw.

The interest rate on Income Bonds have also now reduced – from 1.15 percent gross/1.16 percent AER.

It has been cut by 114/115 basis points to 0.01 percent gross/AER.

The Direct Saver rate has been cut by 85 basis points from one percent gross/AER to 0.15 percent gross/AER.

Adrian Lowcock, head of personal investing at Willis Owen, an investment platform in the UK, said: “NS&I rate cuts come into force today and this is another stark reminder to savers on the importance of proactivity to benefit from the best possible returns.

“Using a savings platform is an easy option for people looking to compare rates across different providers.

“Savers flocked to NS&I during the height of the pandemic and demand was pushed to breaking point, so it was a case of when rates would drop, not if.

“Think ahead of the game and take control of your savings and investments to make your money work harder for you.”

Meanwhile, Kevin Brown, savings specialist at Scottish Friendly, said yesterday: “Today is the day that many savers will have been dreading, as NS&I slashes the rates on its premium bonds and range of saving products.

“Up until now, the Treasury-backed bank has offered some solace to savers as it’s maintained rates while many banks and building societies pulled back from the market following the Bank of England’s decision to reduce interest rates to 0.1 percent.

“NS&I experienced five consecutive months of record purchases of Premium Bonds and savers poured money into accounts as its rates edged towards the top of the best buy tables.

“But with options for savers now limited, it could be a good time for people to review their finances and make decisions on how they can potentially make their money work harder

“This might involve shopping around for market-leading rates or choosing to prioritise paying off debts, as interest rates on credit repayments are likely to exceed interest earned on cash savings.

“In the current climate, not everyone will be able to save regularly, but it’s important that people try to do so whenever they can.

“If you only have a small amount to save or invest on an irregular basis, it’s better to put that money away as you may still be surprised by how quickly it begins to add up.”

Elsewhere in savings news, HSBC and first direct yesterday slashed the interest rate offered on their Regular Saver accounts.

The banks reduced the rate on the linked savings product from 2.75 percent to one percent for new customers.

HSBC customers are able to pay in between £25 and £300 per month, and those who already have the account can get the 2.75 percent AER rate up to a maximum balance of £3,000.

They will continue to receive this rate until maturity at the end of the 12-month term.

Meanwhile, first direct customers can pay in between £25 and £300 per month into the linked savings account, meaning the maximum limit is £3,600 over the course of the year.

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