Savers dealt another blow as National Savings & Investments cuts its ISA interest rate
Monday 05 November 2012
Hard-hit savers were dealt another blow today after Treasury-backed National Savings & Investments cut the interest rate on a popular ISA product.
More than 300,000 account holders have seen the rate on NS&I's tax-free Direct ISA savings account drop from 2.5% to 2.25% from today.
It represents more bad news for savers after reductions by a number of other banks and building societies in recent weeks and as pension savers suffer diminishing returns due to the Bank of England's money printing scheme.
NS&I, whose remit is to have rates which reflect but do not lead the market, said the move was in line with the wider trend for rates to be lower. Its Direct ISA rate has been unchanged since 2009.
Financial research group Moneyfacts said the £80 billion funding for lending scheme, which gives banks access to cheap funding, meant banks were no longer as reliant on the deposits of savers.
A spokeswoman said: "A lot of providers are reducing their rates on a number of products, also on fixed rates and variable rates. Nobody is wanting to be the best buy unfortunately."
Moneyfacts said the current average ISA rate was 2.18%.
In August NS&I said it had overshot its target for net financing - the amount of money left over for the Government after withdrawals and interest payouts - after a small number of customers placed large amounts in accounts and people had not taken money out as expected.
Unlike banks and buildings and societies which are only covered for up to £85,000 by a scheme to compensate customers, the savings and investment company is able to guarantee 100% of deposits because it is backed by the Government.
Simon Rose, spokesman for savings campaign group Save our Savers, said: "It is appalling if you are trying to live off your savings.
"Everything at the moment is working to take money from those who have got some, but we are not seeing any financial benefit."
The interest rates on NS&I's other savings products remain unchanged.
Top Gear presenter is no stranger to foot-in-mouth controversy
Review: Mike Leigh's biopic is a rambling, rich character study
Want to ward off (or welcome) trick-or-treaters? Here's how
- 1 'Nasa Confirms Six Days of Darkness in December': No, they don't - it's a hoax
- 2 Canadian actor punched in face after 'Islamophobia' experiment goes wrong in wake of Ottawa shooting
- 3 Topshop at centre of row over body image as 'shocking' skinny mannequin photo goes viral
- 4 If you think Russell Brand’s new book is confused, you should read what his critics have to say about it
- 5 Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
'Nasa Confirms Six Days of Darkness in December': No, they don't - it's a hoax
Canadian actor punched in face after 'Islamophobia' experiment goes wrong in wake of Ottawa shooting
Halloween 2014: From the Screaming Man of Pluckley to the 'White Lady' of the Tower of London - Britain's 20 most haunted places
Russian politician says Apple CEO Tim Cook should be 'banned' from country after coming out as gay
Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
Pope Francis declares evolution and Big Bang theory are real and God is not 'a magician with a magic wand'
Huge surge in Ukip support after EU funding row, according to new poll
Ukip ‘exploiting grooming scandal’ to secure party’s first police chief
Nigel Farage: 'There’s nothing wrong with white people blacking up'
Maureen Lipman says 'she can't vote Labour while Ed Miliband is leader'
Muslims, immigration and teenage pregnancy: British people are ignorant about almost everything
iJobs Money & Business
£20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...
£40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...
£45,000 - £65,000: Saxton Leigh: Our client is a well-known APAC Corporate and...
£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...