In what's been a fairly lacklustre week in terms of savings rates following last week's base rate announcement, NS&I has stepped up to the plate to announce that it's passing on the full 0.25% increase to its variable rate customers. Savers rejoice!
The Treasury-backed savings provider says that it's increasing rates across its variable product range, which includes Premium Bonds, from 1 December, much to the delight of customers. Rachel Springall, finance expert at moneyfacts.co.uk, welcomes the announcement, saying that "many savers would have been waiting with bated breath to see the change come in from such a trusted brand."
The improvements are as follows:
"NS&I is pleased to be able to offer savers increased rates across our variable products," said Ian Ackerley, chief executive at NS&I. "By reflecting the change in the base rate we are continuing to meet the needs of savers, whilst also balancing the interests of taxpayers and the stability of the broader financial services sector.
"For our 25 million customers, including around 21 million Premium Bonds customers, these changes will present a welcome boost. NS&I will be giving out the largest number of Premium Bond prizes every month, an estimated 2.9 million, and all money invested is 100% secure, as NS&I is backed by HM Treasury."
The improvement will no doubt come as welcome news to savers, particularly given that few savings providers are passing on the rate rise. Indeed, our data shows that just 20 out of some 100 providers have so far announced rate hikes, and even among those who have implemented – or are planning to implement – rate rises, not everyone will be passing on the full 0.25%, and some won't benefit all customers.
Rachel Springall says that there are more providers "dragging their heels" when it comes to rate rises than those who are prepared to pass on the full increase, so some savers may be feeling a bit left out, particularly as many will see no difference in their rates until at least December.
"Some of the biggest banks in the country have yet to confirm whether they will be supporting savers, so it's as good a time as any to review the Best Buys and switch to something better if you're not satisfied," she said.
However, this also means that NS&I appears to be going against the general grain, and as Sarah Coles, personal finance analyst at Hargreaves Lansdown, points out, "the really exciting news for many people is that Premium Bonds are going to get more generous. The prize fund rate will hit 1.4%, so if you are averagely lucky you will beat the best easy access savings accounts on the market, [and] there will be more of the bigger prizes too."
Nonetheless, it's still important to check that the rate you're currently getting is comparable with the best in the market, and this applies whether you're with NS&I or someone else. They may be raising rates but they still don't exactly sit at the top of the charts, so you may be able to find a better deal elsewhere. Check out the best savings rates using our Best Buys and savings search tool, and see if you can benefit from the recent improvements in the market.
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.