NS&I announced interest rate reductions across its fixed and variable savings products yesterday, with the changes effective from May 1, 2020. The announcement said that the changes would ensure NS&I’s interest rates are positioned appropriately against those of its competitors, and help NS&I to strike a balance between the needs of its savers, taxpayers and broader market stability.
Ian Ackerley, NS&I Chief Executive, said: “Reducing interest rates is always a difficult decision.
“We need to ensure our interest rates are set at an appropriate position against those of our competitors.
“These changes reflect NS&I’s requirement to strike a balance between the needs of our savers with taxpayers and the stability of the broader financial services sector.
“We believe our new rates offer our customers a fair return and the assurance of the 100% HM Treasury guarantee on all their holdings with NS&I.”
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The changes mean the Premium Bonds prize fund rate will reduce by 10 basis points – from 1.40 percent to 1.30 percent.
Following the news, savers who have Premium Bonds may wonder what this means for them when it comes to the monthly prize draw.
The odds of any £1 Bond number winning any prize will decrease from 24,500 to one to 26,000 to one.
These changes wil be effective from the May 2020 prize draw.
Ns&I has explained what this is expected to mean for the value of Premium Bonds prizes.
This includes the number of prizes in May 2020 being estimated to reduce.
It’s expected that there will still be two jackpot winners of £1million in May 2020.
However, the number of £100,000 prizes is estimated to be five, while it was six in February this year.
THE PREMIUM BONDS prize fund is to reduce by 10 basis points, the NS&I announced yesterday. What will the reduction in interest rates by NS&I mean for savers?