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£560m languishing in paltry NS&I accounts

600,000 certificates earning just 0.09% a year

NS&I logo

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.

Switch your savings account

Don’t settle for a non-competitive rate on your savings. Check out our Best Rate savings accounts and cash Isa reviews. To check the rate that you’re currently getting on your savings accounts, use our unique Savings Booster tool.

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