It seems that no one is safe in the current trend of rate slashing. For months now providers have been cutting the rates on new issues of savings accounts which has seen best buy easy access accounts reduce from a high of 3.25% in the summer to just 2.50% on average now.
Now it’s the turn of National Savings and Investments (NS&I) which has cut the interest rate on its most competitive product - Direct ISA - from 2.50% tax free/AER to 2.25%. However unlike most providers who have been offering new issues of accounts with lower rates to new customers only, the Direct ISA rate change affects all existing customers as well as new.
The good news however is there are better rates available elsewhere, and the even better news is that ISAs have fared far better during the recent flood of rate reductions, so savers can still achieve best interest rates of up to 3.25% AER on 60 days’ notice or just over 3% AER for an easy access ISA.
NS&I may be an institution in this country and it’s true that no other providers gives savers the same level of protection and therefore peace of mind, however this comes at a price. The rates are generally far less competitive than you can get elsewhere. For those providers covered by the UK Financial Services Compensation Scheme (FSCS), savers are protected up to the £85,000 limit, so in truth savers shouldn’t need to suffer for security if they’re happy to spread their money around.
Those with a large sum to invest should use our managed savings portfolio service to ensure they beat NS&I rates and are still fully protected under FSCS.