National Savings & Investments (NS&I) has today withdrawn its Savings Certificates from sale and has reduced the interest-rate on its Direct Saver and Income Bonds by 0.25%.
NS&I Savings Certificates
Both Fixed Interest Savings Certificates and Index-linked Savings Certificates (also known as Inflation-Beating Savings) have been withdrawn from general sale. The change does not affect existing Savings Certificate holders, who will continue to receive the same deal as they signed up for.
Also, on maturity, existing Savings Certificate customers can continue to roll their investment over into the same Issue they currently hold. They can also reinvest into any of the Savings Certificate terms and Issues regardless of which Savings Certificate they currently hold. This includes either the three- or five-year Issue of Index-linked Savings Certificates or the two- or five-year Issue of Fixed Interest Savings Certificates.
However, as Savings Certificates have been withdrawn from general sale, customers who have invested in other NS&I products will not be able to reinvest their money into Savings Certificates.
At the end of March, almost £24bn was invested in NS&I Savings Certificates.
Direct Saver and Income Bonds rates cut by 0.25%
NS&I has also announced that it is reducing the interest rates paid on its Direct Saver and Income Bonds by 0.25% with immediate effect. Sales volumes in recent months across these products, as well as Savings Certificates, have far exceeded those either anticipated or required by NS&I.
Direct Saver now pays an interest rate of 1.75% AER, while Income Bonds pay 1.76% for those depositing more than £25,000 and 1.46% AER for consumers saving below this amount.
NS&I’s unique savings position
Jane Platt, Chief Executive of NS&I, said: ‘NS&I has a unique position at the heart of the UK savings sector and we continue to follow a policy of balancing the interests of our savers, the taxpayer and the stability of the wider financial services market.
‘While doing this we are tasked with meeting the government financing objective – called our Net Financing target – which is set for us each year by HM Treasury. This year we have agreed to broadly balance the funds coming into NS&I with the funds leaving us.
‘We’ve seen significant amounts of money invested into these products over recent months and so we’ve taken the difficult decision to withdraw Savings Certificates from general sale and reduce the interest rates paid on our Direct Saver and Income Bonds.’
Protecting your savings
While the rates on offer from NS&I can be beaten by Best Rate savings accounts and Best Rate fixed-rate savings accounts, savings with NS&I are 100% guaranteed by HM Treasury, so are very secure. Savings with banks and building societies are generally only guaranteed up to £50,000 per person through the Financial Services Compensation Scheme (FSCS). For more detail on the FSCS, reading the .
For more details on tax-free investments, including NS&I savings certificates, read the Which? guide to Tax on savings and investments.
Which? Money when you need it
You can follow @WhichMoney on Twitter to keep up-to-date with our Best Rates and Recommended Provider product and service reviews.
Sign up for the latest money news, best rates and recommended providers in your newsletter every Friday.
Or for money-saving tips, and news of how what’s going on in the world of finance affects you, join Melanie Dowding and James Daley for the Which? Money weekly money podcast
For daily consumer news, subscribe to the Which? news RSS feed here. And to find out how we work for you on money issues, visit our personal finance campaigns pages.