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| Version 1 | Version 2 |
|---|---|
| NS&I cuts Isa interest rate with immediate effect | NS&I cuts Isa interest rate with immediate effect |
| (about 20 hours later) | |
| National Savings & Investments has cut the interest rate on its tax-free cash Isa in a move it says reflects the "market trend to lower rates on similar products". | National Savings & Investments has cut the interest rate on its tax-free cash Isa in a move it says reflects the "market trend to lower rates on similar products". |
| More than 320,000 savers with the Direct Isa will see the rate they earn drop from 2.5% to 2.25% with immediate effect. This is the first time the rate on the Isa has been cut since 2009 and comes at a time when the Bank of England base rate has been static for more than three years. | More than 320,000 savers with the Direct Isa will see the rate they earn drop from 2.5% to 2.25% with immediate effect. This is the first time the rate on the Isa has been cut since 2009 and comes at a time when the Bank of England base rate has been static for more than three years. |
| In a statement it said: "NS&I sets its interest rates to balance the interests of its savers, taxpayers and supporting stability in the wider financial services sector. | In a statement it said: "NS&I sets its interest rates to balance the interests of its savers, taxpayers and supporting stability in the wider financial services sector. |
| "NS&I has taken the decision to reduce the interest rate on its Direct ISA following its regular review of the savings market, which includes the interest rates payable on products comparable to the Direct Isa." | "NS&I has taken the decision to reduce the interest rate on its Direct ISA following its regular review of the savings market, which includes the interest rates payable on products comparable to the Direct Isa." |
| The move follows cuts by other savings providers following the introduction of the government's Funding for Lending scheme, which has left banks and building societies less reliant on raising deposits to fund mortgages. | The move follows cuts by other savings providers following the introduction of the government's Funding for Lending scheme, which has left banks and building societies less reliant on raising deposits to fund mortgages. |
| NS&I has been an attractive home for many savers' cash as its Treasury-backing means it is a safe haven for money. However, it is subject to strict guidelines on how much it is allowed to take from savers, and is supposed to offer rates that reflect the market but do not top the best-buy tables. | NS&I has been an attractive home for many savers' cash as its Treasury-backing means it is a safe haven for money. However, it is subject to strict guidelines on how much it is allowed to take from savers, and is supposed to offer rates that reflect the market but do not top the best-buy tables. |
| A flurry of recent rate cuts has reduced the average interest rate on a cash Isa to 2.18%. A spokeswoman for comparison site Moneyfacts said: "A lot of providers are reducing their rates on a number of products, also on fixed and variable rates. Nobody is wanting to be the best buy, unfortunately." | A flurry of recent rate cuts has reduced the average interest rate on a cash Isa to 2.18%. A spokeswoman for comparison site Moneyfacts said: "A lot of providers are reducing their rates on a number of products, also on fixed and variable rates. Nobody is wanting to be the best buy, unfortunately." |
| Simon Rose from campaign group Save our Savers said: "It is appalling if you are trying to live off your savings. | Simon Rose from 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." | "Everything at the moment is working to take money from those who have got some, but we are not seeing any financial benefit." |
| A spokesman for NS&I said none of the customers with Direct Isas were tied in to the account. Savers who do want to switch should make sure they arrange a transfer rather than withdrawing their cash and paying it into a new Isa, as that will count towards their £5,640 allowance for the current tax year. | A spokesman for NS&I said none of the customers with Direct Isas were tied in to the account. Savers who do want to switch should make sure they arrange a transfer rather than withdrawing their cash and paying it into a new Isa, as that will count towards their £5,640 allowance for the current tax year. |
| Top savings accounts | Top savings accounts |
| Powered by MoneySupermarket for the Guardian | Powered by MoneySupermarket for the Guardian |