NS&I cuts savings rates - 12/09/2013

From today, savers who hold National Savings & Investments (NS&I) products will see their rates being cut.

The Government-backed provider announced in June that rates on its Direct ISA, Income Bond and Direct Saver products would be reduced with effect from today.

Direct ISA's rate has fallen by 0.5% to 1.75%, resulting in a £29 loss of interest if the full 2013/2014 cash ISA allowance of £5,760 is invested in the product.

Savers with an easy-access Direct Saver account will see their rate drop 0.4% to 1.1%, while those with money invested in an Income Bond will see the rate reduce by 0.5% to 1.25%.

In a statement, NS&I said the reductions were in line with savings market trends.

What can you do?

Despite the rate cut, NS&I's Direct ISA product remains competitive, but there are similar products available that pay higher rates.

For example, Nottingham Building Society pays 2.10% for a minimum investment of £10 on its Access ISA. However, savers must remember that they will have to give 60 days' notice in order to access funds. This product allows transfers in of previous ISA savings, as well as further additions and withdrawals.

Savers looking for easy-access cash ISAs could also consider Tesco Bank's Instant Access Cash ISA and Nationwide Building Society's Easy Saver ISA (Issue 2), which both offer market-leading rates of 2% on a minimum investment of £1.

Savers able to commit funds for five years could also consider Leeds Building Society's inflation-beating five-year fixed rate ISA, which offers a rate of 3% on a minimum investment of £1.

What next?

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