National Savings and Investments slash savings rates
The government-sponsored NSI has reduced the interest rate paid on its direct ISA from 4.8% to 3.3% in line with the 1.5% reduction in UK base rates. The product currently comes with a guarantee that the rate of return will be 0.3% above the Bank of England base rate until April 2009. As we suggested on one of our earlier posts, savers are now being hit in the pocket as the authorities attempt to refloat the UK economy.
It comes as no surprise that the NSI has reduced its interest rates in line with the base rate reduction but such a sharp reduction will hit many people very hard. The group is also in the process of reviewing the rates of return on a number of variable rate savings products as they are all linked in some way to the underlying base rate in the UK.
The NSI has for many years been seen as one of the safest investment operations due to its close association with the government of the day. As a consequence it will be interesting to see how recent deposits have fared while concerns regarding a number of UK and overseas banking operations remain.
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