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NATIONAL SAVINGS AND INVESTMENTS RATE CHANGES

24 July 2003

National Savings and Investments (NS&I) has announced new rates for some of its variable rate products (see Notes to Editors for details). These new rates reflect a reduction of 0.25% in the Bank of England base rate, announced on 10 July 2003.

Included in NS&I's rate change is a reduction of 0.10% on the Premium Bond prize fund rate, which will come into effect on 1 November - a smaller reduction than the 0.25% cut in the base rate.

The odds of winning a prize will remain at 30,000 to 1, meaning that someone with the maximum investment in Premium Bonds of £30,000 could, with average luck, expect to win 12 tax-free prizes a year. At these odds, someone with £15,000 invested could expect to win six prizes a year.

The change in the prize fund rate will also see the introduction of a new prize structure, currently 5% high (£5,000+), 5% medium (£1,000 and £500) and 90% low (£100 and £50) value prizes. The new structure will change to 4%, 3% and 93% respectively which will ensure NS&I can continue to pay odds of 30,000 to 1. This means the overall number of prizes awarded will not be affected by the rate change.

NS&I is not changing the rates on its fixed rate products, which include Savings Certificates, Children's Bonus Bonds, Fixed Rate Savings Bonds and Pensioners Guaranteed Income Bonds.

This is the first change to any of NS&I's variable rate products since those announced following the last change in the base rate in February 2003.

ENDS

Notes to Editors

New variable rates

Gross Rates*	Rate p.a. (change in brackets)	AER**
Income Bonds (new rates effective from 4 September 2003) Under £25,000 £25,000+	2.95% (-0.30%) 3.20% (-0.30%)	2.99% 3.25%
Investment Account (new rates effective from 7 August 2003) £50,000+ £25,000+ £10,000+ £5,000+ £500+ Under £500	2.90% (-0.30%) 2.55% (-0.25%) 2.35% (-0.25%) 2.15% (-0.25%) 2.05% (-0.25%) 2.00% (-0.20%)	2.90% 2.55% 2.35% 2.15% 2.05% 2.00%
Treasurers Account (new rates effective from 7 August 2003) £100,000+ £25,000+ £10,000+	2.90% (-0.30%) 2.55% (-0.25%) 2.35% (-0.25%)	2.90% 2.55% 2.35%
Tax-free rates***	Rate p.a. (change in brackets)	AER**
General Extension Rate (new rate effective from 1 August 2003)	1.05% (-0.24%)	1.05%
ISA (Cash mini and Tessa accounts. New rate effective from 1 August 2003)	3.45% (-0.35%)	3.45%
Premium Bonds (New rate effective from 1 November)	2.15% (-0.10%)	2.15%

* Gross means the taxable rate of interest without the deduction of UK Income 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.

*** Tax-free means the return is exempt from UK Income Tax at all rates of taxation.

Media enquiries

	Mark Brooks	020 7348 9301	mark.brooks@nsandi.com
	Jonathan Akerman	020 7348 9433	jonathan.akerman@nsandi.com
	Wendy Franklin	020 7348 9449	wendy.franklin@nsandi.com
	Sam Bennett	020 7348 9654	sam.bennett@nsandi.com
	Fax	020 7348 9755
	Out of hours	07778 966387

Media team
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The numbers below are for media use only. Customers wishing to contact NS&I can find details here.

Gareth Headon		020 7348 9494
		gareth.headon@nsandi.com
Gill Stephens		020 7348 9449
		gill.stephens@nsandi.com
Iman Asante		020 7348 9301
		iman.asante@nsandi.com
Monica Del-Villar		020 7348 9654
		monica.del-villar@nsandi.com
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Out of hours		All numbers above diverted to staffed mobile phones

 

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