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NATIONAL SAVINGS AND INVESTMENTS RATES CHANGES
20 May 2004
National Savings and Investments (NS&I) is changing the interest rates it offers on its variable rate and fixed rate products, including Premium Bonds, Savings Certificates and its Easy Access Savings Account. Interest rates on all of NS&I's variable rate products will be increasing following the 0.25% rise in the Bank of England base rate. The interest rates on fixed rate products are also increasing due to an upward movement in the market rate of Government Bonds (gilts). The increases vary from 0.15% to 0.30%.
Gill Cattanach, marketing director of NS&I, said: "Whenever market conditions allow, we are committed to reviewing our rates and to passing on increases, whenever we can, to savers and investors. This is part of our commitment to offer consistently fair rates in addition to the nationwide access and 100% security that we offer."
Premium Bonds (Variable rate product)
From 1 September, the number of monthly prizes being awarded will break through the one million barrier for the first time in the history of Premium Bonds, as the tax-free prize fund rate increases from 2.60% to 2.80%. The odds of winning a prize with any single £1 bond will improve from 27,500-1 to 24,000-1, meaning those who hold £30,000 will, with average luck, win 15 prizes a year. When the base rate fell in 2003, the prize fund was not reduced by the corresponding base rate fall.
Tax-free Savings Certificates (Fixed rate product)
The rates on offer on Fixed and Index-linked Savings Certificates will rise by between 0.15% and 0.20% with immediate effect for new purchases. The maximum amount that can be invested in each Issue of Savings Certificates increased from £10,000 to £15,000 in April 2004.
Easy Access Savings Account (Variable rate product)
From 1 June the rate on this new account, launched in January 2004 in place of the out-of-date Ordinary Account, increases by 0.25%. The Ordinary Account closes on 31 July and NS&I is encouraging those account holders to transfer to the Easy Access Savings Account.
NS&I's interest rates: key facts
- When interest rates are set on tax-free products, NS&I takes into account the amount of tax that HM Treasury would have received if the product was taxable. In addition, NS&I does not lend money, so cannot subsidise savings rates by charging high rates of interest on credit/borrowing
- NS&I does not price discriminate between different channels - the return on products is the same no matter where or how they were bought. NS&I's sales channels include telephone, online, by post or at any of the UK's 15,000 Post Office branches
- NS&I's accessibility is not limited by geography or location, and the same rates are available throughout the UK
- NS&I's fixed rate products are on sale everyday throughout the year - many providers offer fixed rate products for limited periods during the year
- NS&I prices its products to give fair, consistent and value for money returns NS&I does not try to buy market share, saving the need for customers to spend time shopping around for short-term headline rates.
ENDS
NOTES TO EDITORS
New Tax-free Rates¹
(Fixed and Variable Products)
| Rate p.a./ AER4
(change in brackets) | Equivalent grossed up rate for basic rate taxpayers² | Equivalent grossed up rate for higher rate taxpayers² |
|---|
2-year Fixed Interest Savings Certificates
26th issue
Guaranteed compound rate over 2 years | 3.25% (+0.20)
| 4.06% | 5.42% |
5-year Fixed Interest Savings Certificates
76th issue
Guaranteed compound rate over 5 years | 3.45% (+0.20%)
| 4.31% | 5.75% |
3-year Index-linked Savings Certificates
7th issue | Index-linking + 1.05% (+0.20%) | 4.44%5 | 5.92%5 |
5-year Index-linked Savings Certificates
34th issue | Index-linking + 1.20% (+0.15%) | 4.63%5 | 6.17%5 |
Children's Bonus Bonds
14th issue
Guaranteed compound rate over 5 years, including fifth anniversary bonus | 4.50% (+0.25%) | n/a | n/a
|
Mini cash ISA / Tessa-only ISA
(new rate effective from 1 June 2004) | 3.95% (+0.25%) | 4.94% | 6.58% |
Premium Bonds
(new rate to calculate the monthly prize fund - effective from 1 September 2004) Odds : 24,000-1 | 2.80% (+ 0.20%) | Tax-free | Tax-free |
New Variable Rates
| Gross Rates³ | Rate p.a. (change in brackets) | AER4 |
|---|
Easy Access Savings Account
(new rates effective from 1 June 2004)
£50,000+
£25,000 - £49,999
£10,000 - £24,999
£5,000 - £9,999
£1,000 - £4,999
£100 - £999 |
4.05% (+0.25%)
3.80% (+0.25%)
3.55% (+0.25%)
3.30% (+0.25%)
3.00% (+0.25%)
1.50% (+0.25%) |
4.05%
3.80%
3.55%
3.30%
3.00%
1.50% |
Income Bonds (new rates effective from 1 July 2004)
Under £25,000
£25,000+ |
3.70% (+0.25%)
3.95% (+0.25%) |
3.76%
4.02% |
Investment Account (new rates effective from 1 June 2004)
£50,000+
£25,000 - £49,999
£10,000 - £24,999
£5,000 - £9,999
£500 - £4,999
Under £500 |
3.65% (+0.25%)
3.30% (+0.25%)
3.10% (+0.25%)
2.90% (+0.25%)
2.80% (+0.25%)
2.75% (+0.25%) |
3.65%
3.30%
3.10%
2.90%
2.80%
2.75% |
Ordinary Account (new rates effective from 1 June 2004)
£500+
Under £500
This account is closed for new business and will close altogether on 31st July 2004. |
0.70% (+0.25%)
0.60% (+0.25%) |
0.70%
0.60% |
Treasurers Account (new rates effective from 1 June 2004)
£100,000+
£25,000 - £99,999
£10,000 - £24,999 |
3.65% (+0.25%)
3.30% (+0.25%)
3.10% (+0.25%) |
3.65%
3.30%
3.10% |
New Fixed Rates
| Gross Rates³ | Rate p.a.
(change in brackets) | AER4 |
|---|
1-year Pensioners Guaranteed Income Bonds
Series 24 | 4.25% (+0.25%) | 4.33% |
2-year Pensioners Guaranteed Income Bonds
Series 30 | 4.45% (+0.25) | 4.54% |
5-year Pensioners Guaranteed Income Bonds
Series 39 | 4.70% (+0.25%) | 4.80% |
1-year Fixed Rate Savings Bonds
Issue 26
Interest is paid net £50,000+
£20,000+
£500+
monthly interest option
Interest is paid net £50,000+
£20,000+
£500+ |
4.40% (+0.30%)
4.20% (+0.30%)
4.05% (+0.30%)
4.30% (+0.30%)
4.10% (+0.30%)
3.95% (+0.30%) |
4.40%
4.20%
4.05%
4.39%
4.18%
4.02% |
3-year Fixed Rate Savings Bonds
Issue 20
Interest is paid net £50,000+
£20,000+
£500+
monthly interest option
Interest is paid net £50,000+
£20,000+
£500+ |
4.75% (+0.25%)
4.55% (+0.25%)
4.40% (+0.25%)
4.65% (+0.25%)
4.45% (+0.25%)
4.30% (+0.25%) |
4.75%
4.55%
4.40%
4.75%
4.54%
4.39% |
5-year Fixed Rate Savings Bonds
Issue 18
Interest is paid net £50,000+
£20,000+
£500+
monthly interest option
Interest is paid net £50,000+
£20,000+
£500+ |
4.85% (+0.25%)
4.65% (+0.25%)
4.50% (+0.25%)
4.75% (+0.25%)
4.55% (+0.25%)
4.40% (+0.25%) |
4.85%
4.65%
4.50%
4.85%
4.65%
4.49% |
Capital Bonds
Series 18 | 4.80% (+0.25%) | 4.80% |
