Millions of savers were dealt a blow after National Savings & Investments cut the interest rates on many of its accounts. NS&I has also slashed the number of premium bond prizes, thereby reducing people’s chances of winning.
The rate on the investment account, held by more than 1.7 million people, will fall from 0.75% to 0.45%, while the 415,000 holders of the Direct Isa will see their rate drop from 1.25% to 1%. The direct saver rate will fall to 0.8% from its current 1.1%, while income bonds will now pay 1%, down from 1.25%.
Meanwhile, the premium bond prize fund rate - the proportion of the total amount invested paid out in prizes - is being cut from 1.35% to 1.25%. This reflects the fact that the total number of prizes will fall to an estimated 2m in June - the equivalent figure for this month is just over 2.3m.And, thus, at a stroke, the benefits of the change in the tax treatment of interest from next month - at least for savers with NS&I - are wiped out.