From Monday, life gets even tougher for savers, as National Savings and Investments (NS&I) brings in lower returns on its tax-free Individual Savings Accounts (ISA’s).
More than 400,000 NS&I savers will see interest rates on the Direct ISA cut from 1.5% to 1.25% a year which is the lowest savings rate since NS&I introduced the product in 2008. Before the change was announced in September, the NS&I Direct ISA had been at the top of the best buy tables, however it was forced to reduce rates, partly because of the success of Pensioner Bonds earlier in the year.
Government rules mean NS&I is not allowed to attract too much cash, in fairness to taxpayers and so as not to destabilise the savings market.
Even though the Bank of England’s base rate has remained at 0.5%, ISA rates across the market have continued to tumble.
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