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Press release
NATIONAL SAVINGS AND INVESTMENTS RATES CHANGES
19 February 2004
National Savings and Investments (NS&I) is changing the interest rates it offers on its variable rate and fixed rate products. Interest rates on all of NS&I's variable rate products will be increasing following the rise in the Bank of England base rate. The interest rates on some fixed rate products will be decreasing due to a fall in returns in the market rate of Government Bonds (gilts) since NS&I's last interest rate changes were announced in November 2003.
Variable rate products, offering rates up to 0.25% higher, go on sale from 1 March 2004 onwards and new issues of fixed rate products will be available from 19 February 2004.
Easy Access Savings Account
Among products with increased interest rates is the new Easy Access Savings Account which was launched in January this year. Interest rates across all tiers will rise by 0.25% on 1 March 2004.
Premium Bonds
Included in NS&I's rate change is an increase of 0.20% on the Premium Bond prize fund rate, which will come into effect on 1 June 2004. The prize fund rises to 2.60% p.a. tax-free and is equivalent to 3.25% for basic rate and 4.33% for higher rate tax-payers. When base rate fell twice last year NS&I did not pass on the full reduction to customers.
The odds of winning a prize will become 27,500 to 1, meaning that someone with the maximum investment in Premium Bonds of £30,000 could, with average luck, expect to win 13 tax-free prizes a year up from 12 prizes a year. The change in the prize fund rate also increases the number of monthly Premium Bond prizes from 770,000 in February 2004 to at least 860,000 a month from 1 June 2004, providing the amount of money invested in Premium Bonds does not fall.
Fixed Rate Products
These new rates on fixed rate products reflect falls in yields on Government Bonds (gilts). Since November 2003, for example, returns on gilts have decreased by around 0.25%.
NS&I's interest rates: key facts
- NS&I does not price discriminate between different channels - the return on products is the same no matter where, when or how they were bought. NS&I's sales channels include telephone, online, by post or at any of the UK's 15,000 Post Office branches
- NS&I's accessibility is not limited by geography or location, as the same rates are available throughout the UK
- NS&I's fixed rate products are on sale everyday throughout the year - many providers offer fixed rate products for limited periods during the year
- NS&I prices its products to give fair, consistent and value for money returns. NS&I does not try to buy market share, saving the need for customers to spend time shopping around for short-term headline rates
Gill Cattanach, marketing director of NS&I, said: &quit;Changes in the Bank of England base rate enable us to pass increases on to savers and investors on all of our variable products. This includes an interest rate rise across all tiers of the new Easy Access Savings Account offering customers greater flexibility and the 100% security that only NS&I can give.&quit;
ENDS
NOTES TO EDITORS
New Tax-free Rates*
(Fixed and Variable Products)
| |
Rate pa/ AER**** (change in brackets) |
Equivalent grossed up rate for basic rate taxpayers** |
Equivalent grossed up rate for higher rate taxpayers** |
2-year Fixed Interest Savings Certificates
24th Issue
Guaranteed compound rate over 2 years |
2.95% (-0.10) |
3.69% |
4.92% |
5-year Fixed Interest Savings Certificates
74th Issue
Guaranteed compound rate over 5 years |
3.20% (-0.20%) |
4.00% |
5.33% |
3-year Index-linked Savings Certificates
5th Issue
Guaranteed compound rate over 3 years |
Index-linking + 0.95% (-0.15%) |
Index-linking + 1.19% |
Index-linking + 1.58% |
5-year Index-linked Savings Certificates
32nd Issue
Guaranteed compound rate over 5 years |
Index-linking + 1.10% (-0.15%) |
Index-linking + 1.38% |
Index-linking + 1.83% |
Children's Bonus Bonds
12th issue |
4.15% (-0.25%) |
n/a |
n/a |
| Mini cash ISA |
3.70% (+0.25%) |
4.63% |
6.17% |
Premium Bonds
(new rate effective from 1 June 2004) |
2.60% (+ 0.20%) |
3.25% |
4.33% |
New Variable Rates
| Gross Rates*** | Rate p.a. (change in brackets) | AER**** |
Easy Access Savings Account
(new rates effective from 1 March 2004)
£50,000+
£25,000 - £49,999
£10,000 - £24,999
£5,000 - £9,999
£1,000 - £4,999
£100 - £999 |
3.80% (+0.25%)
3.55% (+0.25%)
3.30% (+0.25%)
3.05% (+0.25%)
2.75% (+0.25%)
1.25% (+0.25%) |
3.80%
3.55%
3.30%
3.05%
2.75%
1.25% |
Income Bonds
(new rates effective from 1 April 2004)
Under £25,000
£25,000+ |
3.45% (+0.25%)
3.70% (+0.25%) |
3.51%
3.76% |
Investment Account
(new rates effective from 1 March 2004)
£50,000+
£25,000+
£10,000+
£5,000+
£500+
Under £500 |
3.40% (+0.25%)
3.05% (+0.25%)
2.85% (+0.25%)
2.65% (+0.25%)
2.55% (+0.25%)
2.50% (+0.25%) |
3.40%
3.05%
2.85%
2.65%
2.55%
2.50% |
Ordinary Account
(new rates effective from 1 March 2004)
£500+
Under £500 |
0.35% (+0.10%)
0.45% (+0.10%) |
0.35%
0.45% |
Treasurers Account
(new rates effective from 1 March 2004)
£100,000+
£25,000+
£10,000+ |
3.40% (+0.25%)
3.05% (+0.25%)
2.85% (+0.25%) |
3.40%
3.05%
2.85% |
New Fixed Rates
| Gross Rates*** | Rate pa (change in brackets) | AER**** |
1-year Pensioners Guaranteed Income Bonds
Series 22 | 3.85% (+0.05%) | 3.92% |
2-year Pensioners Guaranteed Income Bonds
Series 28 | 4.05% (-0.10%) | 4.13% |
5-year Pensioners Guaranteed Income Bonds
Series 37 | 4.35% (-0.25%) | 4.44% |
3-year Fixed Rate Savings Bond
Issue 18 | £50,000+
£20,000+
£500+ |
| |
monthly interest option |
£50,000+
£20,000+
£500+ |
|
4.35% (-0.20%)
4.15% (-0.20%)
4.00% (-0.20%)
4.25% (-0.20%)
4.05% (-0.20%)
3.90% (-0.20%) |
4.35%
4.15%
4.00%
4.33%
4.13%
3.97% |
5-year Fixed Rate Savings Bond
Issue 16 |
£50,000+
£20,000+
£500+ |
| |
monthly interest option
| £50,000+
£20,000+
£500+ |
|
4.50% (-0.25%)
4.30% (-0.25%)
4.15% (-0.25%)
4.40% (-0.25%)
4.20% (-0.25%)
4.05% (-0.25%) |
4.50%
4.30%
4.15%
4.49%
4.28%
4.13% |
Capital Bonds
Issue 16 |
4.45% (-0.20%) |
4.45% |
* Tax-free means the return is exempt from UK Income Tax at all rates of taxation.
** At current tax rates.
*** Gross means the taxable rate of interest without the deduction of UK Income Tax.
**** 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.
2. NS&I is the exclusive sponsor of The Classical BRIT Awards, the UK's premier classical awards show, at the Royal Albert Hall on 26 May 2004.
3. For further information, or to arrange an interview, contact the media relations team.
| Mark Brooks | 020 7348 9301 | mark.brooks@nsandi.com |
| Samantha Bennett: | 020 7348 9654 | sam.bennett@nsandi.com |
| Wendy Franklin | 020 7348 9449 | wendy.franklin@nsandi.com |
| Fax | 020 7348 9755 | |
| Out of hours | All above numbers go to mobile phones staffed 24 hours |
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.
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