Interest rates cut for thousands of savers by NS&I
18 Sep 2015
Over 400,000 National Savings & Investments (NS&I) customers will see the interest rates on their accounts reduced by mid-November.
The rate on the NS&I tax-free Direct ISA account will be cut by 0.25 of a percentage point to 1.25%.
NS&I decided to cut the rate after it found itself taking large inflows of cash. Government rules require that the NS&I rate does not impinge on its competitors.
Within this financial year, NS&I is required not to exceed inflows of £10 billion more than it pays out.
The Government-backed organisation took in a net £5.4 billion during the first three months of this year alone, with an increase in premium bond sales of £9.1 billion serving to boost income.
Jane Platt, chief executive of NS&I, revealed that the decision to cut the rate was ‘difficult’ but that the institution had to ‘strike a balance between the needs of our savers, taxpayers and the stability of the broader financial services sector’.
The cut will affect customers from 16 November, and will apply to £3.8 billion of savings.