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Media centre /
Press releaseNATIONAL SAVINGS AND INVESTMENTS RATE CHANGES23 May 2007National Savings and Investments (NS&I) is increasing the interest rates on a wide range of its variable and fixed rate savings offers by up to 0.25% per annum. This increase follows the movement in the Bank of England base rate on 10 May 2007 which has a bearing on NS&I’s variable rate products. The returns on many of NS&I’s fixed rate products have risen because of increases in the gilt markets. Returns on these products are largely unaffected by any changes in the Bank of England base rate. The revised interest rates on these fixed and variable rate products, including Income Bonds and Easy Access Savings Account, will come into effect on 23 May 2007, with the exception of the Direct ISA which was raised on 10 May 2007, and Premium Bonds which will take effect from 1 June 2007. Inflation-beating Savings interest rates, which were increased on 25 April 2007, remain unchanged. As a result, new issues are available of products including tax-free1 Children’s Bonus Bonds and Fixed Interest Savings Certificates. Premium Bonds The Premium Bond prize fund rate will increase from 3.60% p.a. to 3.80% p.a. free of UK Income Tax and Capital Gains Tax. The rate increases by 0.20% because of the need to take into account tax foregone5. However the prize fund rate for the special Premium Bonds prize draw for June 2007 (for Bonds purchased on or before 31 April 2007) will now be 3.95%. This is because for this month only NS&I will pay out five jackpot prizes of £1 million each, and this special draw of course marks the 50th anniversary of the first ever Premium Bonds prize draw. From July 1 2007 the prize fund rate will be 3.80% (and this applies to Bond purchased on or before 31 May 2007). 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, win 15 tax-free prizes a year. The affect of the adjustments to the prize bands in the July 2007 draw (see table) means there will be more higher value prizes, for example the number of £50,000 prizes will rise from 33 in May 2007 to 58 in July 2007. The effect of changes in the Premium Bond prize fund rate
*An additional 0.15% interest to be paid (3.95%) to create the prize fund for the special draw in June 2007 only, where an additional three jackpot prizes of £1 million will be awarded, celebrating the 50th anniversary of the first Premium Bonds prize draw. John Prout, NS&I sales director said: “Our aim is to provide consistent and fair returns and this means that wherever possible we have increased the rates on our products. Movements in NS&I variable rate products are triggered by changes in the Bank of England base rate. However fixed rate products change because of movements in the price of gilts.” ENDS Notes to editors
*An additional 0.15% interest to be paid (3.95%) to create the prize fund for the special draw in June 2007 only, where an additional three jackpot prizes of £1 million will be awarded, celebrating the 50th anniversary of the first Premium Bonds prize draw.
1. Tax-free means that interest and prizes are exempt of UK income Tax and Capital Gains tax 2. Gross means the taxable rate of interest without the deduction of UK Income Tax 3. 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 4. At current tax rates 5. When interest rates are set on tax-free products, NS&I takes into account the amount of tax the Exchequer would have received if the product had been taxable 6. Inflation-beating Savings interest rates, which were increased on 25 April 2007, remain unchanged. 7. 50 years of Premium Bonds – in June 2007, NS&I will celebrate 50 years since the first Premium Bonds prize draw. For more information, contact the NS&I media team.
Media team The numbers below are for media use only. Customers wishing to contact NS&I can find details here.
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