Savings giant NS&I has ditched some plans to make products less generous, including previously announced changes to Premium Bonds.
The Treasury-backed provider, which offers a range of savings and investments products to 25 million customers, said the cancellations to its planned rate reductions will help support savers during the coronavirus pandemic.
Variable interest rate changes announced on February 17 will be cancelled and customers should disregard letters about them, it said.
The announcement may bring a bit of relief to savers, with the Bank of England base rate currently sitting at just 0.1% and many providers having slashed returns on savings pots.
But NS&I (National Savings and Investments) said cuts to fixed-term products, also announced in February, will still go ahead from May 1.
Among the planned changes which have now been scrapped, the Direct Saver will not fall from 1% interest to 0.7%, the Investment Account will not fall from 0.8% to 0.6% and Income Bonds will not fall from 1.15% to 0.7%.
The Premium Bonds prize fund rate will remain at 1.4% – with a planned reduction to 1.3% now cancelled.
It means the odds of any £1 Bond number winning any prize will remain at 24,500 to one, rather than the planned reduction in odds to 26,000 to one.
To keep our teams safe weâre temporarily reducing our contact centre opening hours. For the time being, we'll be open 7am to 10pm every day. You can still manage your accounts online, and please only call if you absolutely have to. For more updates head to https://t.co/D8dKRza9Go— NS&I (@nsandihelp) April 7, 2020
Guaranteed Growth Bonds, Guaranteed Income Bonds and Fixed Interest Savings Certificates will still see rates fall from May 1. For example, the interest rate on one-year Guaranteed Growth Bonds will decline from 1.25% to 1.1%.
Customers holding Guaranteed Growth Bonds, Guaranteed Income Bonds and Fixed Interest Savings Certificates and whose investments mature on or before June 1 and who automatically renew into a new issue of the same term, will receive the previous, higher interest rate.
However, any customers who choose to renew into a new issue but a term of a different length will receive the reduced interest rate effective from May 1.
Current holdings will be unchanged until they mature and customers do not need to take action now. NS&I will write to all holders of Guaranteed Growth Bonds, Guaranteed Income Bonds and Fixed Interest Savings Certificates at least 30 days before the end of their term.
NS&I is also urging customers to go online to nsandi.com if they wish to invest or if they need help to manage their savings during the coronavirus pandemic.
This will help it to free up contact centre capacity for those customers who need to access it most. Customers should also only send NS&I anything by post if they have no other choice.
With the Bank of England base rate being cut to 0.1%, those who’ve prudently put money away in savings are being kicked in the teeth – so being able to keep one savings rate high at least mitigates that a touchMartin Lewis, founder, MoneySavingExpert.com
Laura Suter, a personal finance analyst at investment platform AJ Bell, said: “NS&I’s U-turn on interest rates makes sense, and helps savers at a time when other banks are slashing rates and also raises vital money for the Government to fund its Covid-19 rescue efforts.”
She continued: “By maintaining the current 1% interest rate on the Direct Saver account NS&I is not far off the top paying easy-access savings account, which pays 1.25%, and some will prefer the reassurance of the Government backing of NS&I at the moment.”
All products held with NS&I offer 100% capital security as the provider is backed by the Treasury.
Martin Lewis, founder of MoneySavingExpert.com, said: “The suite of rate cut reversals by NS&I provides welcome relief for millions of savers with money in these accounts.
“Normally NS&I isn’t supposed to use its unique market position as a state-owned institution to provide competition-busting deals. Likely the Government has agreed to this for two reasons.
“Firstly NS&I’s role is to raise money for the state, and with the huge expenditure needed for coronavirus support schemes, this is one of the ways it can do that.
“Plus I suspect there’s a policy element here, that with the Bank of England base rate being cut to 0.1%, those who’ve prudently put money away in savings are being kicked in the teeth – so being able to keep one savings rate high at least mitigates that a touch.”