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Press release
NATIONAL SAVINGS AND INVESTMENTS RATE CHANGES
17 August 2006
National Savings and Investments (NS&I) is changing the interest rates it offers on most of its variable rate savings offers.
Following an increase in the Bank of England base rate on 3 August 2006 from 4.50% to 4.75%, interest rates on NS&I’s variable rate offers will be increased.
Interest rates on all NS&I variable rate products will come into effect on 17 August 2006, with the exception of the Direct ISA (3 August 2006), Premium Bonds, Ordinary Account and General Extension Rate which will take effect from 1 September 2006.
Premium Bonds
The Premium Bond prize fund rate will increase from 2.95% p.a. to 3.15% p.a. tax-free3, equivalent to 5.25% p.a. for a higher rate taxpayer and 3.93% p.a. for a basic rate taxpayer.
The odds of winning a prize will stay at 24,000 to 1, meaning that someone with the maximum investment in Premium Bonds of £30,000 could, with average luck, expect to win 15 tax-free prizes a year
Fixed Rate Products
Because the Gilt yields have been volatile over the last few weeks and there is evidence to suggest that this will continue, we are not changing rates on our fixed rate products. Once markets have settled down we will review the situation and the scope to change rates on these products.
NS&I’s interest rates: key facts
-
NS&I does not lend money, so cannot subsidise savings rates by charging high rates of interest on credit/borrowing. When interest rates are set on tax-free3 products, NS&I takes into account the amount of tax that the Exchequer would have received if the product had been taxable
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NS&I does not price discriminate between different channels – the return on products is the same no matter where, when or how they were bought. NS&I’s sales channels include telephone, online, by post or at any of the UK’s 14,000 Post Office ® branches
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NS&I’s accessibility is not limited by geography or location, as the same rates are available throughout the UK and to non UK resident customers
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NS&I’s fixed rate products are on sale every day throughout the year (although NS&I’s Guaranteed Equity Bond is on sale in tranches during the year)
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NS&I prices its products to give fair, consistent and value for money returns.
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NS&I does not try to buy market share, saving the need for customers to spend time shopping around for short-term headline rates
John Prout, Sales Director for NS&I, said: “The changes to our interest rates reflect the increase in the Bank of England base rate.
”We always price our offers fairly and consistently, and wherever possible we will adjust our variable rate products to follow changes in base rate. Our fixed rate products track changes in the gilt markets, and we continue to monitor these closely.”
New variable rates
|
Gross Rates¹ |
Rate p.a. (change in brackets) |
AER² |
|
Income Bonds (new rates effective from 17 August 2006) |
|
|
|
Under £25,000 |
4.20% (+0.25%) |
4.28% |
|
£25,000+ |
4.45% (+0.25%) |
4.54% |
|
Investment Account (new rates effective from 17 August 2006) |
|
|
|
£50,000+ |
4.05% (+0.25%) |
4.05% |
|
£25,000+ |
3.70% (+0.25%) |
3.70% |
|
£10,000+ |
3.50% (+0.25%) |
3.50% |
|
£5,000+ |
3.30% (+0.25%) |
3.30% |
|
£500+ |
3.20% (+0.25%) |
3.20% |
|
Under £500 |
3.15% (+0.25%) |
3.15% |
|
Treasurers Account (new rates effective from 17 August 2006) |
|
|
|
£100,000+ |
4.15% (+0.25%) |
4.15% |
|
£25,000+ |
3.80% (+0.25%) |
3.80% |
|
£10,000+ |
3.60% (+0.25%) |
3.60% |
|
Ordinary Account (new rates effective from 1 September 2006) |
|
|
|
£500+ |
1.20% (+0.25%) |
1.20% |
|
Under £500 |
1.10% (+0.25%) |
1.10% |
|
Tax-free rates³ |
Rate p.a. (change in brackets) |
AER² |
|
General Extension Rate (new rate effective from 1 September 2006) |
2.28% (+0.24%) |
2.28% |
|
ISA (Cash mini and Tessa accounts. New rate effective from 17 August 2006) |
4.45% (+0.25%) |
4.45% |
|
Direct ISA (new rate effective from 03 August 2006) |
5.30% (+0.25%) |
5.30% |
|
Premium Bonds (New rate effective from 1 September 2006) |
3.15% (+0.20%) |
3.15% |
- 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 that interest and prizes are exempt of UK income Tax and Capital Gains tax
Media team
NS&I has a number of spokespeople available for interviews and our experienced radio team is available via our ISDN line: 020 7602 4522.
The numbers below are for media use only.
Customers
wishing to contact NS&I can find details here.
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