NS&I reduces rates on savings accounts

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NS&I reduces rates on savings accounts

Fri 20th Feb 2009

National Savings and Investments (NS&I) has announced that it will reduce the rates of interest it offers on its fixed-rate savings accounts by up to 1.35 per cent.

The savings account provider blamed the reductions on the fall in value of gilt-edged government bonds, which are known as gilts for short.

NS&I said that since September last year, the yields from these bonds had fallen by as much as 3.5 per cent, thanks to the credit crunch.

In a statement, the savings provider said: "NS&I's fixed savings rates take into account the returns on gilts, whilst its variable savings rates are affected by changes to the Bank of England base rate."

Recently, the Bank of England cut the base rate by 0.5 percentage points. While the move was aimed at making mortgages and loans cheaper for consumers, it also enables many banks and building societies to justify reducing interest rates on their savings accounts.

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