Savings shake up another blow for ‘cash’ savers

With Anthony Long, Chartered Financial Planner

One of the largest savings organisations in the UK, NS&I has announced plans to cut interest rates. A popular provider for cash based deposits, this will be seen as another blow to those that use the government back provider.

Interest rate reductions will apply to NS&I variable rate and some fixed term savings products, with effect from 24 November this year.  This includes the Direct Saver reduced by 85 basis points from 1.00% gross/AER to 0.15% gross/AER and the Investment Account rate slashed from 0.80% gross/AER to 0.01% gross/AER which is a reduction of 79 basis points.

Some fixed rates products will also see a cut in interest (also from 24 November) including the one-year Guaranteed Growth Bonds which will drop from 1.1% to 0.1% AER, and the one-year Guaranteed Income Bonds slashed from 1.06% to 0.06% AER. However, this will not apply to the term of your account, you will only see the rate drop if you renew.

The Premium Bonds prize fund rate is also set to be reduced. A family favourite for over 60 years, since their introduction by then Chancellor of the Exchequer Harold Wilson, the prize fund will reduce from 1.40% to 1.00% (40 basis points), taking the odds of any £1 Bond number winning any prize from 1 in 24,500 to 1 in 34,500. The changes to Premium Bonds come in to effect for the December 2020 prize draw.

“My role as a financial planner is to review a client’s finances regularly, not only due to changes in your circumstances, but also to highlight any changes that may impact their financial wellbeing” comments Anthony Long, Chartered Financial Planner

“Whilst we always recommend clients maintain a healthy ‘emergency fund’ in cash based deposits, these changes are likely to have an impact on how clients think, especially if directly affected. It is therefore worth keeping an open mind as to the alternatives as there are many other savings and investment solutions available” 


NS&I products do offer 100% capital security as they are backed by HM Treasury

The information provided must not be considered as financial advice. 

We always recommend that you seek financial advice before making any financial decisions

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