NS&I reduces interest rate on Direct ISA - December 2013

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  Change will ensure NS&I continues to balance interests of its savers, taxpayers and the stability of the broader financial services sector

NS&I today announced that it was reducing the interest rate on its Direct ISA by 0.25% to 1.50% tax-free/AER. This change will come into effect from 27 February 2014. NS&I will be notifying customers affected by the interest rate reduction at least sixty days in advance of it taking place.

NS&I sets its interest rates to balance the interests of its savers, taxpayers and the stability of  the broader financial services sector. It has taken the decision to reduce the interest rate on Direct ISA following its regular review of the savings market, which includes the interest rates payable on products comparable to Direct ISA. 

Jane Platt, NS&I Chief Executive, said:

“The Direct ISA rate stood out in our review of competitor rates offered on ISAs with no bonus component. We consider the revised rate offers a fair rate to customers in the current interest rate environment.”

1. AER stands for Annual Equivalent Rate and enables the comparison of interest rates from different financial institutions and across different products on a like-for-like basis. It shows what the notional annual rate would be if interest was compounded each time it was credited or paid out. Where interest is credited once a year the rate quoted and the AER will be the same.

Notes to Editors

1. Tax-free means that interest is exempt from UK Income Tax and Capital Gains Tax.
2. AER stands for Annual Equivalent Rate and enables the comparison of interest rates from different financial institutions and across different products on a like-for-like basis. It shows what the notional annual rate would be if interest was compounded each time it was credited or paid out. Where interest is credited once a year the rate quoted and the AER will be the same.
3. Information on Direct ISA can be found here.