National Savings reports big increase in new deposits
NS&I has reported a 65% increase in new deposits in the last quarter of 2008.Today’s quarterly report shows how worried savers turned to the government-backed safe haven following ‘turbulence in the financial markets’. The figure for new deposits rose to £9.55bn for October-December 2008, compared with £5.67bn for the July-September period.
Although described by NS&I as ‘unsolicited’, the latest inflow of funds continues a trend that can be traced back over several years. The annual figure for new deposits in 2006-7 was £14.17m, this rose to £15.54 for 2007-8 and has already reached £19.22bn for 2008-9, with a final quarter to go before the end of the financial year.
NS&I does not offer particularly high interest rates for savers, and has recently cut rates, to 0.3% – 0.7% for its Easy Access Savings Account, 0.9% for its Cash Isa and 1.8% for its Direct Isa.
Index-linked savings certificates offer index-linking plus 1%, but with the retail price index at 0.1% this is also at an all-time low.
If NS&I products don’t offer top rates, they do come with a special guarantee, describing themselves as ‘100% secure, backed by HM Treasury’. They have 27m customers and account for 8.11% of the UK savings market.
Many savers are less interested in rates than security- and others are attracted to NS&I by the chance of winning a premium bond prize. The odds of winning are currently 36,000 to 1, less than they were a year ago, when they stood at 21,000 to 1.
For details of premium bond prizes see: http://www.nsandi.com/products/pb/index.jsp
Which? Best Buys
Savers looking for higher rates of interest should check our latest Best Buys. These banks do not offer the 100% guarantee of NS&I, but are all covered by the Financial Services Compensation Scheme, to a maximum of £50,000.
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