NS&I cuts rates on savings productsCuts blamed on base rate and returns on gilts

21 February 2009

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Government-backed NS&I (National Savings and Investments) has reduced the interest rates on many of its variable and fixed rate savings products.

Variable rates have been cut by up to 0.75% a year with reductions on its fixed rates of up to 1.35%.

Gilts and bank base rate

NS&I's fixed savings rates take into account the returns on gilts, while its variable savings rates are affected by changes to the Bank of England base rate.

The new lower rates will only affect new fixed rate customers with no change to rates on savings already deposited.

Premium bonds 

The Premium Bonds prize fund rate remains unchanged at 1.8% (the rate implemented after the November base rate change last year) and will be held for at least the March 2009 draw.

NS&I recently closed its "unpopular" cash Isa to new customers after what it called a modernisation drive, replacing it with a revamped direct Isa.

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