NS&I savings rate cut: other banks ‘could follow suit’
The move, which will affect 404,000 savers, was announced in September this year. NS&I said the rate cut was a response to declining interest rates offered by other banks and building societies.
At the time, NS&I chief executive Jane Platt noted interest rates in the easy access ISA market had been in decline over the year, and NS&I’s ISA had stood at the top of best buy tables for “some time”.
“To ensure we continue to strike a balance between the needs of our savers, taxpayers and the stability of the broader financial services sector, we have taken the difficult decision to reduce the rate on our Direct ISA,” she said.
Calum Bennie, savings expert at Scottish Friendly, said other banks could implement similar rate cuts.
“Given the Bank of England has recently indicated the outlook for interest rates remains stubbornly low, today’s NS&I rate cut is not unexpected but will be disappointing for savers and is yet another blow to cash ISAs. This cut by a Treasury led provider makes it likely that others will follow suit,” he said.
“Savers are set for at least a further year of dismally low interest rates. This is why more people are now dipping their toes into stocks and shares ISAs as a way of saving for their future. Although risk is attached, savers should seriously consider stocks and shares ISAs as a potentially higher return alternative to cash deposits.”