Another blow to savers as NS&I slashes interest rate on two popular savings accounts
For this week’s Savings Guide, Anna Bowes, savings expert from The Private Office, breaks down changes made by NS&I and how its easy access account rate compares to the best on the market…
NS&I, one of the UK’s biggest savings institutions, has announced it will cut the interest rate on its easy access accounts from 12 February.
With more than 24 million customers, many will be disappointed by the news, especially as it comes after earlier rate cuts on its Guaranteed Growth and Guaranteed Income Bonds.
The cut will take the rate on the state-owned savings bank’s Direct Saver account from 3.2% AER to 3.05%.
The rate on its monthly paying Income Bonds account will also fall from 3.26% gross/3.30% AER, to 3.01% gross/3.05% AER.
It has mirrored the Bank of England’s last interest rate cut of 0.25%, though the base rate is still higher at 3.75%.
“NS&I is not alone. There have been many rate cuts recently, but interestingly, the easy access best buy table has been pretty stable over the last week or so, which reminds us of the value of shopping around,” Bowes says.
“Whilst some providers are reacting to the base rate cut, others are more driven by competition.”
How does NS&I compare?
Bowes says the lower rate is still far better than most of the high street providers.
HSBC and Barclays are cutting rates on their main easy access accounts to 1.05% from March.
Lloyds is already paying just 0.75% AER on balances of under £25k.
But there are much higher rates out there if you are willing to take a well-informed leap of faith with a provider that you might be less familiar with, Bowes says.
Cahoot’s Sunny Day Saver pays 5% AER but only on balances of up to £3,000.
Santander pays 6% AER on its Edge Saver Account on balances of up to £4,000 – but you also have to hold a Santander Edge Current Account, which comes with a monthly fee.
Chase is still paying one of the top rates available with its Chase Saver with a 12-month boosted rate of 4.5%.
But as the name suggests, this rate includes a boost of 2.25% for 12 months. You also need to have opened a Chase current account since 29 December to be eligible.
Here’s a look at the top-paying easy access accounts on the market…