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Press release

NATIONAL SAVINGS AND INVESTMENTS RATE CHANGES

25 July 2007

National Savings and Investments (NS&I) is increasing the interest rates on a wide range of its variable savings offers by up to 0.25% per annum. 

This increase follows the movement in the Bank of England base rate on 05 July 2007 which has a bearing on NS&I’s variable rate products.  The revised interest rates will come into effect on 25 July 2007 for all variable rate products, with the exception of the Direct ISA which was raised on 05 July 2007, Premium Bonds which will take effect from 1 August 2007 and Income Bonds on 6 August 2007.

Premium Bonds

The Premium Bond prize fund rate will increase from 3.80% p.a. to 4.00% p.a. free of UK Income Tax and Capital Gains Tax.  The rate increases by 0.20% because of the need to take into account tax foregone4.  The odds of winning a prize with each £1 Premium Bond will improve from 1 in 24,000 to 1 in 21,000 as a result of the change in the prize band split (see table below).

The effect of changes in the Premium Bond prize fund rate

	JULY 2007 3.80% prize fund rate	AUGUST 2007 (estimate) 4.00% prize fund rate
Total value of prizes	£113.36 million	£117.94 million
Total number of Prizes	1.49 million	1.68 million
Prize fund rate	3.80%	4.00%
Odds of winning a prize	1 in 24,000	1 in 21,000
Prize band split: Higher value prizes(£5,000 +) Medium value (£500 +) Lower value (£50 +)	15% 15% 70%	10% 10% 80%

 
ENDS

Notes to editors 

Tax-free1 variable rates	Rate p.a. (change in brackets)	AER3
Cash mini ISA (new rate effective from 25 July 2007)	5.35% (+0.25%)	5.35%
Direct ISA (new rate effective from 5 July 2007)	6.30% (+0.25%)	6.30%
Premium Bond prize fund (new rate effective from 1 August 2007)	4.00% (+0.20%)

 

 

 

 

                     

New variable rates (gross rates2)	Rate p.a. (change in brackets)	AER3
Income Bonds  (new rates effective from 06 August 2007) £25,000+ Under £25,000	5.45% (+0.25%) 5.20% (+0.25%)	5.59% 5.33%
Investment Account  (new rates effective from 25 July 2007) £50,000+ £25,000+ £10,000+ £5,000+ £500+ Under £500	4.85% (+0.25%) 4.50% (+0.25%) 4.30% (+0.25%) 4.10% (+0.25%) 4.00% (+0.25%) 3.95% (+0.25%)	4.85% 4.50% 4.30% 4.10% 4.00% 3.95%
Easy Access Savings Account  (new rates effective from 25 July 2007) £50,000+ £25,000+ £10,000+ £5,000+ £1000+ Under £1000	5.15% (+0.25%) 4.90% (+0.25%) 4.65% (+0.25%) 4.40% (+0.25%) 4.10% (+0.25%) 2.60% (+0.25%)	5.15% 4.90% 4.65% 4.40% 4.10% 2.60%

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

4. 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.

Gill Stephens		020 7348 9449
		gill.stephens@nsandi.com
Iman Asante		020 7348 9301
		iman.asante@nsandi.com
Angela Mason		020 7348 9433
		angela.mason@nsandi.com
ISDN for interviews		020 7602 4522
Out of hours		All numbers above diverted to staffed mobile phones

 

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