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

NS&I slashes Premium Bond prizes and savings rates

0
Written by:
17/02/2020
NS&I has announced a raft of cuts across its savings and bonds range while Premium Bonds holders will have less chance of winning from May.

The government’s savings arm has confirmed a number of changes for savers from 1 May.

The 20+ million Premium Bonds savers will have less chance of winning as the odds will move from 24,500-to-one to 26,000-to-one.

NS&I has also slashed the number of prizes available from the May 2020 draw, meaning the current 3.47 million pot will fall to an estimated 3.29 million.

The prize fund rate will also be reduced from 1.40% to 1.30% tax-free. Premium Bonds aren’t like normal savings accounts as they don’t pay interest. Instead the interest that should be paid (currently 1.40%) is used to fund a monthly prize draw.

Fixed and variable rate savings products

The Direct Saver will be cut from 1% to 0.70% while its Investment Account will fall from 0.80% to 0.60%.

NS&I confirmed that customers holding Guaranteed Growth Bonds, Guaranteed Income Bonds and Fixed Interest Savings Certificates, and whose investments mature on or before 1 June, will receive the higher rate if they automatically renew on a new issue of the same term.

Here’s what’s changing:

  • Income Bonds: from 1.15% to 0.70%
  • 1-year Guaranteed Growth Bonds: from 1.25% to 1.10%
  • 2-year Guaranteed Growth Bonds: from 1.45% to 1.20%
  • 3-year Guaranteed Growth Bonds: from 1.70% to 1.30%
  • 5-year Guaranteed Growth Bonds: from 2% to 1.65%
  • 1-year Guaranteed Income Bonds: from 1.20% to 1.05%
  • 2-year Guaranteed Income Bonds: from 1.40% to 1.15%
  • 3-year Guaranteed Income Bonds: from 1.65% to 1.25%
  • 5-year Guaranteed Income Bonds: from 1.95% to 1.60%
  • 2-year Fixed Interest Savings Certificates: from 1.30% to 1.15%
  • 5-year Fixed Interest Savings Certificates: from 1.90% to 1.60%.

Ian Ackerley, NS&I chief executive, said: “Reducing interest rates is always a difficult decision. We need to ensure our interest rates are set at an appropriate position against those of our competitors. These changes reflect NS&I’s requirement to strike a balance between the needs of our savers with taxpayers and the stability of the broader financial services sector.

“We believe our new rates offer our customers a fair return and the assurance of the 100% HM Treasury guarantee on all their holdings with NS&I.”

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.

Autumn Statement: Everything you need to know at a glance

Yesterday Chancellor Jeremy Hunt made his first fiscal statement in the role, outlining a range of tax measure...

End of Help to Buy: 10 alternatives for first-time buyers

The deadline for Help to Buy Equity Loan applications passed on 31 October. If you’re a first-time buyer who...

Moving to an energy prepayment meter: Everything you need to know

As households struggle with the soaring cost of energy, tens of thousands of billpayers are expected to move o...

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