NS&I cuts savings rates and odds of premium bond wins
29 March 2016
- From the section Business
The odds of winning a premium bond prize are to be cut, along with savings rates on four products from National Savings and Investments (NS&I).
From June 2016 the chances of winning a premium bond prize will be reduced from 26,000 to one, to 30,000 to one.
The savings rates on Direct Isas, Direct Saver, Income Bonds and the Investment Account will also be cut.
NS&I said the new rates would still be competitive with other savings rates in the market.
Direct Isa rates were previously reduced in November 2015.
|Variable Rate Savings Products|
|Product||Existing rate||New rate (from 6 June 2016)|
|Direct Isa||1.25% tax free||1% tax free|
|Direct Saver||1.10% gross||0.8% gross|
|Income Bonds||1.25% gross||1% gross|
|Investment Account||0.75% gross||0.45% gross (from 1 July)|
NS&I defended its decision to cut savings rates, which follows a continuing reduction in returns to savers from banks and building societies over the past seven years.
“The majority of the new interest rates on offer are either at, or above, average market rates,” said Jane Platt, the chief executive of NS&I.
“We believe they present a fair offer to customers, who will also continue to benefit from our 100% HM Treasury guarantee on all holdings, as well as tax-free prizes for Premium Bonds.”
The number of premium bond prizes each month will also be reduced.
|Premium Bond Changes|
|Current rate||New rate (from 6 June 2016)|
|Prize fund||1.35% tax free||1.25% tax free|
|Winning odds||26,000 to one||30,000 to one|
|Total value of prizes||£67.5m||£62.9m|
|Number of prizes||2.3m||2m|
|Number of £1m prizes (per month)||2||2|
|Number of £100,000 prizes||5||2|
|Number of £50,000 prizes||12||5|
This post was written by FSB News