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Media centre /
Press releaseINTEREST RATE CHANGE: CHILDREN’S BONUS BONDS01 February 2005A new Issue of Children’s Bonus Bonds, from National Savings and Investments (NS&I), will go on sale on 1 February 2005, offering an interest rate of 4.00%. Since August 2004 the interest rate had remained consistent at 4.45%. The rate change will not affect anyone who has invested in previous Issues of Children’s Bonus Bonds. Rate sustained through Christmas In November 2004, following significant falls in the yield on gilts in the short to medium term money markets since June, NS&I changed the rates on all of its fixed rate products except Children’s Bonus Bonds. At the time, NS&I chose not to reduce the rate on Children’s Bonus Bonds because, traditionally, they are very popular in the period before Christmas. The rate had been a steady 4.45% since 19 August 2004. Since the busy Christmas period, gilt yields – the prime influence on NS&I’s fixed rate products – have not risen sufficiently and the rate of 4.45% cannot be offered any longer, which is why it is being reduced now. However, the rates on all of NS&I’s other savings and investments remain unaffected at this time. Other providers of children’s savings bonds have changed their rates as much as 10 times in a year, including Abbey, which made five rate cuts in the past 12 months. In the past three months NatWest and Alliance & Leicester have also reduced the rates offered on their children’s savings bonds. John Prout, NS&I’s sales director, said: “We kept the rate as consistent as possible for as long as we could, particularly through the popular Christmas months but, unfortunately, we now have to make this change to Children’s Bonus Bonds. “The relatively poor performance of gilts has exacerbated the position but if the market turns round and gilts begin to rise again we will, of course, review the rate and increase it if we’re able to do so.” NS&I Children’s Bonus Bonds: key facts
NS&I’s interest rates: key facts
ENDS NOTES TO EDITORS
1. Tax-free means the return is exempt from UK Income Tax at all rates of taxation. 2. 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. For further information, or to arrange an interview, contact the media team.
Media team The numbers below are for media use only. Customers wishing to contact NS&I can find details here.
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