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NATIONAL SAVINGS AND INVESTMENTS RATES CHANGES
24 June 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 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 on Government Bonds (gilts). The rate increases vary from 0.15% to 0.30%.
Gill Cattanach, marketing director of NS&I, said: "As in May, whenever we can and when market conditions allow, we are committed to passing on increases to savers and investors. This is part of our commitment to offer consistently fair rates alongside our nationwide access and 100% security."
Premium Bonds (Variable rate product)
From 1 October, the tax-free prize fund rate increases from to 2.8% to 3.0%, the fourth increase in 2004 so far. The total value of prizes being awarded will have risen by nearly 50%, from £41.5 million in January 2004 to £61.8 million in October 2004.
The odds of winning a prize with any single £1 bond will remain at 24,000-1 as they will be from September, however, there will be increases in the number of prizes ranging from £100 to £50,000. Those who own £30,000 in Premium Bonds will, with average luck, win 15 prizes a year.
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 0.25% 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From 1 July the rate on this new account, launched in January 2004 in place of the out-of-date Ordinary Account, increases by 0.25%.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 and NS&I does not try to buy market share.
ENDS
NOTES TO EDITORS
New Tax-free Rates¹
(Fixed and Variable Products)
New issues from 24 June 2004
unless otherwise stated | Rate p.a./ AER2
(change in brackets) | Equivalent grossed up rate for basic rate taxpayers³ | Equivalent grossed up rate for higher rate taxpayers³ |
|---|
2-year Fixed Interest Savings Certificates
27th issue
Guaranteed compound rate over 2 years | 3.50% (+0.25%)
| 4.38% | 5.83% |
5-year Fixed Interest Savings Certificates
77th issue
Guaranteed compound rate over 5 years | 3.65% (+0.20%)
| 4.56% | 6.08% |
3-year Index-linked Savings Certificates
8th issue | Index-linking + 1.25% (+0.20%) | 5.06%4 | 6.75%4 |
5-year Index-linked Savings Certificates
35th issue | Index-linking + 1.35% (+0.15%) | 5.19%4 | 6.92%4 |
Children's Bonus Bonds
15th issue
Guaranteed compound rate over 5 years, including fifth anniversary bonus | 4.70% (+0.20%) | n/a | n/a
|
Mini cash ISA / Tessa-only ISA
(new rate effective from 1 July 2004) | 4.20% (+0.25%) | 5.25% | 7.00% |
Premium Bonds
(new rate to calculate the monthly prize fund - effective from 1 October 2004) Odds : 24,000-1 | 3.00% (+ 0.20%) | n/a | n/a |
New Variable Rates
| Gross Rates5; | Rate p.a. (change in brackets) | AER2 |
|---|
Easy Access Savings Account
(new rates effective from 1 July 2004)
£50,000+
£25,000 - £49,999
£10,000 - £24,999
£5,000 - £9,999
£1,000 - £4,999
£100 - £999 |
4.30% (+0.25%)
4.05% (+0.25%)
3.80% (+0.25%)
3.55% (+0.25%)
3.25% (+0.25%)
1.75% (+0.25%) |
4.30%
4.05%
3.80%
3.55%
3.25%
1.75% |
Income Bonds (new rates effective from 5 August 2004)
£25,000+
Under £25,000 |
4.20% (+0.25%)
3.95% (+0.25%) |
4.28%
4.02% |
Investment Account (new rates effective from 1 July 2004)
£50,000+
£25,000 - £49,999
£10,000 - £24,999
£5,000 - £9,999
£500 - £4,999
Under £500 |
3.90% (+0.25%)
3.55% (+0.25%)
3.35% (+0.25%)
3.15% (+0.25%)
3.05% (+0.25%)
3.00% (+0.25%) |
3.90%
3.55%
3.35%
3.15%
3.05%
3.00% |
Ordinary Account (new rates effective from 1 July 2004)
£500+
Under £500
This account is closed for new business and will close altogether on 31st July 2004. |
0.95% (+0.25%)
0.85% (+0.25%) |
0.95%
0.85% |
Treasurers Account (new rates effective from 1 July 2004)
£100,000+
£25,000 - £99,999
£10,000 - £24,999 |
3.90% (+0.25%)
3.55% (+0.25%)
3.35% (+0.25%) |
3.90%
3.55%
3.35% |
New Fixed Rates
Gross Rates*
New issues from 24 June 2004 | Rate p.a.
(change in brackets) | AER4 |
|---|
1-year Pensioners Guaranteed Income Bonds
Series 25 | 4.55% (+0.30%) | 4.65% |
2-year Pensioners Guaranteed Income Bonds
Series 31 | 4.70% (+0.25) | 4.80% |
5-year Pensioners Guaranteed Income Bonds
Series 40 | 4.90% (+0.20%) | 5.01% |
1-year Fixed Rate Savings Bonds
Issue 27
Interest is paid net £50,000+
£20,000+
£500+
monthly interest option
Interest is paid net £50,000+
£20,000+
£500+ |
4.70% (+0.30%)
4.50% (+0.30%)
4.35% (+0.30%)
4.60% (+0.30%)
4.40% (+0.30%)
4.25% (+0.30%) |
4.70%
4.50%
4.35%
4.70%
4.49%
4.33% |
3-year Fixed Rate Savings Bonds
Issue 21
Interest is paid net £50,000+
£20,000+
£500+
monthly interest option
Interest is paid net £50,000+
£20,000+
£500+ |
5.00% (+0.25%)
4.80% (+0.25%)
4.65% (+0.25%)
4.85% (+0.20%)
4.70% (+0.25%)
4.55% (+0.25%) |
5.00%
4.80%
4.65%
4.96%
4.80%
4.65% |
5-year Fixed Rate Savings Bonds
Issue 19
Interest is paid net £50,000+
£20,000+
£500+
monthly interest option
Interest is paid net £50,000+
£20,000+
£500+ |
5.05% (+0.20%)
4.85% (+0.20%)
4.70% (+0.20%)
4.90% (+0.15%)
4.75% (+0.20%)
4.60% (+0.20%) |
5.05%
4.85%
4.70%
5.01%
4.85%
4.70% |
Capital Bonds
Series 19 | 5.00% (+0.20%) | 5.00% |
- Tax-free means the return is exempt from UK Income Tax at all rates of taxation.
- 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.
- At current tax rates.
- These figures assume the Retail Price Index rises by its current figure of 2.8% for each of the next five years and that current rates of tax remain unchanged.
- Gross means the taxable rate of interest without the deduction of UK Income Tax.
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