£560m languishing in paltry NS&I accounts600,000 certificates earning just 0.09% a year

27 August 2012

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British savers have £560m sitting in fixed-interest savings certificates from National Savings & Investments (NS&I) that are earning a paltry interest rate of 0.09%, Which? Money has uncovered.

Fixed-interest savings certificates from NS&I allow you to make a lump-sum investment which earns a guaranteed tax-free rate of interest over a set term. While not currently available to new customers, any existing certificates reaching maturity now are automatically reinvested into a fixed interest certificate with a similar term if a customer does not actively decide to move their money elsewhere.

However, customers with older certificates who are still expecting to earn the 2.25% offered by the last issue in May 2011 might be in for a nasty surprise. Certificates that matured before 8 October 2001 were not automatically rolled into new issues by NS&I. 

Instead, anyone who didn't actively move their money received the General Extension Rate (GER), which has been slashed from a high of 3.15% in August 2007 to just 0.09% from 1 April 2009 onwards. This rate applies to the 7th-43rd issues of NS&I fixed interest certificates.

Savers suffer from paltry NS&I savings rates

Almost 11 years on, the total amount of money still languishing in these low-interest accounts stands at a staggering £560m across 600,000 certificates. If you had £10,000 receiving the GER in 2009, your money would have grown by just £27 by 2012.

Miserly interest rates on savings are nothing new. Earlier this year Which? revealed that UK customers are missing out on £12.8bn worth of interest as a result of poor rates being offered on banks' savings accounts and cash Isas. 

As customers seeking a safe haven for their savings flock to NS&I, causing the organisation to exceed its target for net financing by £18m in 2011/12, it may come as a surprise that such a well-respected brand is paying as little as 0.09% on more than half a million customer holdings.

NS&I told us that it wrote to individuals upon maturity to inform them of the revised interest rate. If you think you own one of the 600,000 NS&I holdings earning just 0.09%, make sure you contact NS&I to check the rate of interest being paid on your savings.

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