NS&I reduces interest rate on Income Bonds, Direct Saver and Direct ISA
- Rate reductions reflect market trends on similar products
- Changes will ensure NS&I continues to balance interests of its savers, taxpayers and the stability of the financial services market
NS&I today announced that it was reducing the interest rate on its Income Bonds to 1.25%, its Direct Saver to 1.1% and its Direct ISA to 1.75%. These changes will come into effect from 12 September 2013. NS&I will be writing to customers affected by the interest rate reductions to inform them of the change 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 wider financial services sector. It has taken the decision to reduce the interest rates on Income Bonds, Direct ISA and Direct Saver following its regular review of the savings market, which includes the interest rates payable on comparable products. The reductions reflect the lower interest rates now available elsewhere. NS&I customers can sign-up for email notification of all NS&I interest rate changes and other NS&I news here.
Jane Platt, Chief Executive, NS&I, said:
“Rates across the savings market have fallen over recent months and to ensure we continue to strike a balance between the needs of our savers, taxpayers and the stability of the broader financial sector, we have taken the difficult decision to reduce the rates on our Direct ISA, Direct Saver and Income Bonds accounts.”
Overview of rate changes announced for September 2013
| Product | New variable rate p.a (change in brackets) | AER* |
|---|---|---|
| Direct ISA | 1.75% (-0.50%) Tax free | 1.75% |
| Income Bonds | 1.25% (-0.50%) Gross | 1.26% |
| Direct Saver | 1.1% (-0.40%) Gross | 1.1% |
*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
- Tax-free means that interest is exempt from UK Income Tax and Capital Gains Tax.
- 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.
- Information on Direct ISA, Direct Saver and Income Bonds can be found online.