NS&I has made a shocking announcement that it will be cutting the rates on its easy access accounts to rock bottom levels from November 2020.
Earlier in the year, NS&I cancelled planned cuts to a number of its accounts. It said at the time...
"To support savers at this difficult time, we are not going ahead with the variable interest rate reductions that we previously announced. So our Premium Bonds, Direct Saver, Income Bonds and Investment Account will stay at their current rates.”
However, after taking more than £14.5bn from savers in the last few months, NS&I has subsequently announced swingeing cuts that will be far harsher than the original ones planned.
In summary, the following accounts will be affected from 24th November 2020.
Income Bonds – currently a best buy easy access account which pays out a monthly interest of 1.15% gross, this will be cut to just 0.01% gross/AER.
The Direct Saver – another easy access account, which is currently paying 1% AER, will be cut to 0.15% AER.
The third easy access account that NS&I has on offer - the Investment Account – will be cut from 0.80% AER to 0.01% AER.
Even children and ISA savers will not escape the carnage.
The Junior ISA, which is currently a market-leading account, will be cut from 3.25% to just 1.50% and the Direct ISA will be cut from a competitive 0.90% to 0.10%
Premium Bond holders will also be dismayed to hear that the interest rate applied to the prize fund will be cut from 1.40% to 1% - which will mean that the odds of each £1 bond willing a prize will drop from 1 in 24,500 to 1 in 34,500.
While a cut of some description was not completely unexpected, the savageness of the cuts will be devastating, not least to all those who have battled to deposit money with NS&I over the last few months.
As a result of this announcement, we have removed these accounts from our best buy tables - although they are still on sale.
Unfortunately, a very real consequence of a huge wall of money potentially being withdrawn from NS&I in response to these impending cuts, could be that the competition we have recently seen in the savings market could swiftly end, as providers are swamped with new money.
If you’re dismayed with low interest rates and would like to speak to us about your future financial goals and returns why not get in touch and see if one of our expert independent financial advisers can help.
We’re currently offering all those with £100,000 or more in savings, investments or pensions a FREE cash flow retirement review with one of our TPO colleagues, worth up to £500. You can find out more here.