National Savings & Investments (NS&I) has cancelled the interest rate cuts it had planned for premium bonds and variable savings accounts, although changes to fixed-rate deals will still go ahead.
The rate cuts were meant to come into force from 1 May 2020, but NS&I says the decision to cancel some of them was taken to help support savers during the coronavirus crisis.
Most savings providers are either reducing their interest rates or pulling products altogether, in reaction to the current economic uncertainty and the recent cut to the Bank of England base rate.
Here, Which? explains what interest rates will remain on offer and what your chances are of winning a premium bonds prize in the next draw.
While this still sounds like a lot of prizes, it would have had the effect of reducing the odds of winning a prize from 24,500 to 1, to 26,000 to 1.
NS&I has calculated each premium bond holder's collective chance of winning as an average interest rate. Currently, this is 1.4%, but the cuts would have reduced it to 1.3%.
While no one's cash invested in premium bonds earns any interest, this rate is the average gain that's earned over a year - taking in everything from those winning the £1m jackpot and those who don't win anything.
Bear in mind that, despite the decision not to cut the number of premium bonds prizes up for grabs, you're still not guaranteed to win anything at all. As each £1 bond is given a number, which is then chosen by ERNIE - NS&I's random number generator - it could be that your numbers never come up.
Interest rates offered by NS&I accounts aren't usually market-leading, but as most savings accounts seem to be on a downward trajectory, they might become increasingly more attractive.
The table below shows the NS&I accounts and rates currently on offer, which won't change from 1 May as originally planned.
|NS&I product||AER remaining as it is|
Under the original plans to cut rates, all accounts would have offered between 0.2% and 0.4% less than in this table, bringing them all down to 0.6% to 0.7%.
Currently, none of these accounts offer market-leading rates, but that could change as providers pass on the base rate cut to savers through lower rates.
Despite some cuts being cancelled, NS&I fixed-rate accounts will still see reductions on 1 May. The table below shows which accounts are being affected, and how rates will be cut.
|NS&I product||Current AER||AER from 1 May 2020|
|Guaranteed growth bonds (one-year)||1.25%||1.1%|
|Guaranteed growth bonds (two years)||1.45%||1.2%|
|Guaranteed growth bonds (three years)||1.7%||1.3%|
|Guaranteed growth bonds (five years)||2%||1.65%|
|Guaranteed income bonds (one-year)||1.21%||1.05%|
|Guaranteed income bonds (two years)||1.41%||1.15%|
|Guaranteed income bonds (three years)||1.66%||1.25%|
While the current five-year guaranteed growth bond matches the top rate for today's five-year fixed-term savings account, come 1 May it will become much less competitive.
However, there are a number of advantages to saving with NS&I even with the rate cuts: