National Savings takes the axe to interest rates

National Savings & Investments has announced interest rate cuts to most of its products. The cuts all take effect from 1 May:

Product

Current rate

New rate from 1/5/2020

Direct Saver

1.00% gross/AER

0.70% gross/AER

Income Bonds

1.15% gross/1.16% AER

0.70% gross/AER

Investment A/C

0.80% gross/AER

0.60% gross/AER

Premium Bonds

1.40%

24,500:1 monthly odds of winning

1.30%

26,000:1 monthly odds of winning

 

The premium bond changes mean that from May, 98.95% of all winning draws will be for the minimum prize of £25. However, as the table shows, the underlying prize interest rate for premium bonds is markedly better than what NS&I is offering on its other variable rate products.

NS&I also worsened the terms on their fixed rate products - Guaranteed Growth Bonds, Guaranteed Income Bonds and Fixed Interest Savings Certificates. These are not on general sale and are only available for reinvestment of maturing plans.