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NS&I cuts Direct ISA rate to 2.25%

The government-backed organisation has brought its ISA rate down to reflect a cut in interest rates across the market.

 

by Michelle McGagh on Nov 05, 2012 at 10:24

NS&I cuts Direct ISA rate to 2.25%

National Savings & Investments (NS&I) has cut the rate on its Direct Individual Savings Account (ISA) to bring it in line with the low rates being offered by others in the market.

Savers will see the rate on the NS&I Direct ISA cut from 2.5% to 2.25% from today. The reduction in the rate follows a flurry of bank ISA rate cuts, which have further hit savers who are already struggling to make a decent return on their money.

NS&I – which is popular with savers because it is a government-run organisation and is backed by the Treasury, making it the safest way to save – said it sets its interest rates ‘to balance the interests of its savers, taxpayers, and supporting stability in the wider financial services sector’.

The change follows a regular review of the savings market, which includes the interest rates on comparable ISAs and will affect 326,553 customers who hold a combined £2.7 billion in the ISA as at 31 March.

Earlier this year NS&I cut the interest rate on its key savings offering, the Direct Saver account, from 1.75% to 1.5% after customers rushed to invest amid fears of a troubled market.

At the time NS&I said it was concerned that it would breach its net financing target set by the Treasury, which sets the amount of money that is allowed to flow into and out of NS&I’s accounts to ensure a competitive market.

NS&I chief executive Jane Platt said there had been an increase in customer deposits since November last year and a decrease in the number of customers withdrawing money.

Last year NS&I was forced to withdraw an inflation-linked savings certificate after it proved too popular – almost 500,000 savers invested over a four-month period.

1 comment so far. Why not have your say?

Old Young or Young Old?

Nov 05, 2012 at 12:56

"ensure a competitive market" - Love it. So on the one hand the tax payers are giving the banks very cheap money under the Funding for Lending scheme and on the other hand the banks are giving the same tax payers a slap in the face by reducing the rates they offer.

So its OK for the state to help the banks with cheap money, but its not OK for the state to provide savers with a "decent" returns on their money via NS&I.

Makes you think who the government are actually working for?

When will we wake up and say enough is enough?

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