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Press release

NATIONAL SAVINGS AND INVESTMENTS RATE CHANGES

18 November 2008

NS&I (National Savings and Investments) is reducing the interest rates on its variable rate savings offers by up to 1.50% per annum following the movement in the Bank of England base rate by 1.50%.  The rates on NS&I’s fixed-rate savings will remain unchanged.

The Bank of England base rate reduced on 6 November 2008 from 4.50% to 3.00%. This has a bearing on NS&I’s variable rate savings, consequently revised interest rates will come into effect from 19 November 2008. The new Premium Bonds prize fund rate, which will reduce by 1.05%, will take effect from 1 December 2008 while the rate on Income Bonds, which will reduce by just 1.30%, will take effect from 19 November 2008. The interest rate of its Direct ISA decreased on 7 November 2008.

Please see table 1 for more details on the rate changes to the NS&I variable rate savings products.

Premium Bonds

The Premium Bond prize fund rate will now be 1.80% p.a.  NS&I will continue to pay out two £1 million jackpot prizes each month, in addition to other tax-free 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 36,000 to 1 (previously 24,000 to 1).  This means that someone with the maximum £30,000 invested could, with average luck, win 10 prizes a year. 

Please see table 2 for the effect of changes in the Premium Bond prize fund rate.

Table 1

Tax-free1 variable rates	Rate p.a. (change in brackets)	AER3
Cash  ISA (new rate effective from 19 November 2008)	2.40% (-1.50%)	2.40%
Premium Bond prize fund (new rate effective from 1 December 2008)	1.80% (-1.05%)	1.80%

 

New variable rates (gross rates2)	Rate p.a. (change in brackets)	AER3
Income Bonds  (new rates effective from 19 November 2008) £25,000+ Under £25,000	2.70% (-1.30%) 2.45% (-1.30%)	2.73% 2.48%
Investment Account  (new rates effective from 19 November 2008) £50,000+ £25,000+ £10,000+ £5,000+ £500+ Under £500	1.90% (-1.50%) 1.55% (-1.50%) 1.35% (-1.50%) 1.15% (-1.50%) 1.05% (-1.50%) 1.00% (-1.50%)	1.90% 1.55% 1.35% 1.15% 1.05% 1.00%
Easy Access Savings Account  (new rates effective from 19 November 2008) £50,000+ £25,000+ £10,000+ £100 - £1000 £1,000-£4,999 £5,000-£9,999 The above three tiers have now been merged into one as below; £100 - £9,999	2.20% (-1.50%) 1.95% (-1.50%) 1.70% (-1.50%)   1.45% (-1.50%) 1.45% (-1.20%) 1.45% (+0.30%)   1.45%	2.20% 1.95% 1.70%   1.45% 1.45% 1.45%   1.45%

 

Table 2

	NOVEMBER 2008	JANUARY 2009 (estimate)
Total value of prizes	£87,839,800	£57,028,150
Total number of prizes	1,541,049	1,056,077
Prize fund rate	2.85%	1.80%
Odds of winning a prize	24,000 to 1	36,000 to 1
Prize band split: Higher value prizes(£5,000 +) Medium value (£500 +) Lower value (£50 +)	5%   5% 90%	4%   1% 95%

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

Table 2

ENDS

Notes to editors

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
Angela Mason		020 7348 9433
		angela.mason@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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