NS&I cuts its rate on ISA

More than 320,000 savers were dealt an expensive blow yesterday when Government-backed National Savings & Investments cut its Direct ISA interest rate by 10 per cent to 2.25 per cent.

The move, NS&I said, "reflected market trend to lower rates on similar products". Its ISAs are popular with savers because they are backed and guaranteed by the Treasury.

This year NS&I cut the interest rate on its biggest savings offering, the Direct Saver account, from 1.75 per cent to 1.5 per cent after customers rushed in amid fears of market turmoil.