You are here: Home - Saving & Banking - News -

NS&I savers urged to act now to avoid rate cuts

0
Written by: Emma Lunn
17/11/2020
Savers have just a week to move their money out of National Savings and Investments (NS&I) savings accounts before interest rates are slashed.

NS&I announced the rate cuts to the government-backed accounts in September and they come into effect next week on 24 November.

The move will see the interest rate paid on NS&I’s Direct Saver – a previous best buy – reduce from 1% to 0.15%.

Some other NS&I accounts will pay even less interest after 24 November. For example, the rate on its Investment Account, another previous best buy table topper, will go from paying 0.8% to just 0.01%.

The interest rate on Income Bonds will also fall to 0.01% (from 1.16%)

NS&I ISA rates will fall too. The Direct ISA will go from paying 0.9% to 0.1% while the Junior ISA will pay just 1.5%, down from 3.25%.

The rate cuts came as a surprise when they were announced and a blow to savers who have ploughed money into NS&I since the pandemic began. In general, savings rates are at an all-time low, with the Bank of England base rate having sat at 0.1% since March.

NS&I said it was making the cuts to “strike a balance between the interests of savers, taxpayers and the broader financial services sector”.

Technical issues

Savers who tried to move their money out of NS&I last month ahead of the rate cuts faced technical problems and error messages. But NS&I says these are now solved.

A NS&I spokesperson said: “We have experienced high demand for our services and high call levels since March 2020. Currently, for November 2020, the average time that it takes for a customer to speak to a member of our customer services team is 18 minutes.

“We are currently in the process of hiring around 200 additional staff. We expect that this additional resource will improve the speed of our customer service and also give us greater capacity to resolve any complex queries more quickly. We have also utilised additional office space to increase capacity and assist customers across all of NS&I’s operations.”

Premium Bonds

Premium Bond holders will also have a much lower chance of winning a prize from December, when the prize rate will be cut to 1%.

The number of prizes will reduce from about 3.85 million in September’s draw to an estimated 2.85 million in the December draw.

This means the odds of any £1 Premium Bonds number winning any prize will tumble from 24,500 to one, to 34,500 to one from the December draw.

Where should you move your money to?

Savers looking for an easy access savings account can earn 0.7% AER if they put their money in Saga’s Easy Access Savings Account, or 0.57% if they open a Freedom Savings Account with RCI Bank.

The best one-year fixed rate bond is from Al Rayan Bank and pays 1.08% AER. Rival BLME pays 1% on its one-year bond.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Seven ways to get help with energy bills this winter

We knew today’s announcement was going to be painful, but it’s still a shock to the system. When this kick...

Flight cancelled or delayed? Your rights explained

With no sign of the problems in UK aviation easing over the peak summer period, many will worry whether holida...

Rail strikes: Your travel and refund rights

Thousands of railway workers will strike across three days this week, grinding much of the transport system to...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week