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Press release

NATIONAL SAVINGS AND INVESTMENTS RATE CHANGES

14 October 2008

NS&I (National Savings and Investments) is decreasing the interest rates on most of its variable savings offers by up to 0.50% per annum.

This decrease follows the movement in the Bank of England base rate on 8 October 2008, from 5.00% to 4.50%, which has a bearing on NS&I’s variable rate products.  The revised interest rates will come into effect from 22 October 2008 on some of its variable rate products. The interest rate of its Direct ISA decreased on 8 October 2008, while Premium Bonds will take effect from 1 November 2008 and Income Bonds from 6 November 2008.

Premium Bonds
The Premium Bond prize fund rate will decrease from 3.25% p.a. to 2.85% p.a.  NS&I will continue to pay out over one million tax-free Premium Bond prizes each month, including two £1 million jackpot prizes.  Any prizes won are free from UK Income Tax and Capital Gains Tax.

The odds of winning a prize with each £1 Premium Bond number will change to 24,000 to 1 (previously 22,000 to 1).  This means that someone with the maximum £30,000 invested could, with average luck, win 15 prizes a year.  The prize band split between lower, medium and higher value prizes will see a slight change.

The effect of changes in the Premium Bond prize fund rate

	OCTOBER 2008 3.40% prize fund rate	NOVEMBER 2008 (estimate) 2.85% prize fund rate
Total value of prizes	£104,565,250	£87,839,800
Total number of prizes	1,677,517	1,541,049
Prize fund rate	3.40%	2.85%
Odds of winning a prize	22,000 to 1	24,000 to 1
Prize band split: Higher value prizes(£5,000 +) Medium value (£500 +) Lower value (£50 +)	6%   5% 89%	5%   5% 90%

 

ENDS

Notes to editors

Tax-free1 variable rates	Rate p.a. (change in brackets)	AER3
Cash  ISA (new rate effective from 22 October 2008)	3.90% (-0.50%)	3.90%
Premium Bond prize fund (new rate effective from 1 November 2008)	2.85% (-0.40%)	2.85%

 

New variable rates (gross rates2)	Rate p.a. (change in brackets)	AER3
Income Bonds  (new rates effective from 6 November 2008) £25,000+ Under £25,000	4.00% (-0.50%) 3.75% (-0.50%)	4.07% 3.82%
Investment Account  (new rates effective from 22 October 2008) £50,000+ £25,000+ £10,000+ £5,000+ £500+ Under £500	3.40% (-0.50%) 3.05% (-0.50%) 2.85% (-0.50%) 2.65% (-0.50%) 2.55% (-0.50%) 2.50% (-0.50%)	3.40% 3.05% 2.85% 2.65% 2.55% 2.50%
Easy Access Savings Account  (new rates effective from 22 October 2008) £50,000+ £25,000+ £10,000+ £5,000+ £1000+ Under £1000	3.70% (-0.50%) 3.45% (-0.50%) 3.20% (-0.50%) 2.95% (-0.50%) 2.65% (-0.50%) 1.15% (-0.50%)	3.70% 3.45% 3.20% 2.95% 2.65% 1.15%

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

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.

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.

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
ISDN for interviews		020 7602 4522
Out of hours		All numbers above diverted to staffed mobile phones

 

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