NS&I issues new savings rules with customers urged to 'ditch' account

NS&I has introduced new rules for its savings accounts. National Savings and Investments, which is backed by the Treasury, has hiked savings rates "a little" with the financial provider making a change to account terms and conditions amid the Cost of Living crisis.

Sarah Coles, head of personal finance, Hargreaves Lansdown commented: “Savings rates have crept up a little at NS&I. They’ve kept it quiet, given the general election, but they’re not much to shout about anyway. You can do so much better elsewhere."

Ms Coles went on and said: “It’s still significantly off the pace of the best on the market. Accounts offering more than five per cent are decidedly thin on the ground now, but there’s a whole raft of deals available at 4.9 per cent or above, so there’s no need to settle for less.”

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She explained: “At 4.5 per cent, it’s well under the best on the market at 5.22 per cent, and well off the rest of the pack leaders, which are still offering more than five per cent. If you use a cash savings platform, you can spread your money across a number of institutions, so that the first £85,000 with each of them is protected by the FSCS, and you can still see everything in one place."

“It’s likely to be a sign that NS&I was keen to stem a flow of savers pulling cash out of the institution, so it has some relatively healthy numbers to report in July," Ms Coles said. "The institution always has to balance the need to raise money against the need to offer value-for-money for taxpayers – while not distorting the savings market as a whole.

"It’s safe to say that these rates amply reflect its aim to be ‘good enough but not too good’.” (Annual Equivalent Rate) illustrates what the annual rate of interest would be if the interest was compounded each time it was paid. Where interest is paid annually, the quoted rate and the AER are the same.

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