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Press release

NS&I RATE CHANGES

19 February 2009

NS&I (National Savings and Investments) is reducing the interest rates on most of its variable rate savings offers by up to 0.75% per annum, following movements in the Bank of England base rate.  Revised interest rates will come into effect from 19 February 2009.

NS&I is also reducing rates on its fixed-rate savings products by up to 1.35% as a consequence of falls in gilt yields by up to 3.5% since September 2008.  This change will not affect savings already invested in NS&I’s fixed rate savings range.

NS&I’s fixed savings rates take into account the returns on gilts, whilst its variable savings rates are affected by changes to the Bank of England base rate.

The Premium Bonds prize fund rate remains unchanged at 1.8% (the rate implemented after the November base rate change last year) and will be held for at least the March 2009 draw.

Please see table 1 for more details on the rate changes to the NS&I variable rate savings products. Please see table 2 for more details on the rate changes to the NS&I fixed rate savings products.

Table 1

Tax-free1 variable rates	Rate p.a. (change in brackets)	AER3
Cash  ISA (new rate effective from 19 February 2009)	0.90% (-0.50%)	0.90%
Direct ISA (new rate effective from 19 February 2009)	1.80% (-0.50%)	1.80%

 

New variable rates (gross rates2)	Rate p.a. (change in brackets)	AER3
Income Bonds  (new rates effective from 19 February 2009) £25,000+ £500 - £24,999	1.45% (-0.75%) 1.20% (-0.75%)	1.46% 1.21%
Investment Account  (new rates effective from 19 February 2009) £50,000+ £25,000+ £10,000+ £1 - £9,999	0.50% (-0.40%) 0.40% (-0.15%) 0.40% (+0.05%) 0.30% (-0.05%)	0.50% 0.40% 0.40% 0.30%
Easy Access Savings Account  (new rates effective from 19 February 2009) £50,000+ £25,000+ £10,000+ £100 - £9,999	0.70% (-0.50%) 0.45% (-0.50%) 0.45% (-0.25%) 0.30% (-0.15%)	0.70% 0.45% 0.45% 0.30%

 

Table 2

New tax-free1 fixed rates (New rates effective from 19 February 2009)	Rate p.a./ AER3 (change in brackets)	Equivalent grossed up rate for basic rate taxpayers2	Equivalent grossed up rate for higher rate taxpayers2
2-year Fixed Interest Savings Certificates 46h Issue Guaranteed compound rate over 2 years	0.95% (-0.95%)	1.19%	1.58%
5-year Fixed Interest Savings Certificates 95th Issue Guaranteed compound rate over 5 years	1.90% (-0.45%)	2.38%	3.17%
Children’s Bonus Bonds 33rd Issue Guaranteed compound rate over 5 years, including fifth anniversary bonus	2.30% (-0.55%)	2.88%	3.83%

 

New fixed rates (gross rates2) (New rates effective from 19 February 2009)	New rate p.a. (change in brackets)	AER3
1-year Guaranteed Income Bonds Issue 47	1.00% (-1.25%)	1.00%
3-year Guaranteed Income Bonds Issue 41	1.70% (-1.00%)	1.71%
5-year Guaranteed Income Bonds Issue 38	2.55% (-0.50%)	2.58%
1-year Guaranteed Growth Bonds Issue 47	1.00% (-1.35%)	AER same as gross
3-year Guaranteed Growth Bonds Issue 41	1.75% (-1.05%)	AER same as gross
5-year Guaranteed Growth Bond Issue 38	2.60% (-0.55%)	AER same as gross

                                  

1. Tax-free means that interest and prizes are exempt of UK Income Tax and Capital Gains Tax

2. Gross means the taxable rate of interest without the deduction of UK Income Tax

3. AER stands for Annual Equivalent Rate and enables the comparison of interest rates from different financial institutions and across different products on a like-for-like basis. It shows what the notional annual rate would be if interest was compounded each time it was credited or paid out. Where interest is credited once a year the rate quoted and the AER will be the same

ENDS

Notes to editors

When interest rates are set on tax-free products, NS&I takes into account the amount of tax the Exchequer would have received if the product had been taxable.

Media team
NS&I has a number of spokespeople available for interviews and our experienced radio team is available via our ISDN line: 020 7602 4522.

The numbers below are for media use only. Customers wishing to contact NS&I can find details here.

Gareth Headon		020 7348 9494
		gareth.headon@nsandi.com
Gill Stephens		020 7348 9449
		gill.stephens@nsandi.com
Iman Asante		020 7348 9301
		iman.asante@nsandi.com
Monica Del-Villar		020 7348 9654
		monica.del-villar@nsandi.com
ISDN for interviews		020 7602 4522
Out of hours		All numbers above diverted to staffed mobile phones

 

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