14th September 2015
Hundreds of thousands of UK savers in government backed National Savings & Investment plans will have to endure an interest rate cut from November.
NS&I announced on Monday that it is cutting the interest rate on its Direct ISA by 0.25% to 1.25% tax-free/AER, from 16 November 2015.
The organisation will be notifying customers affected by the interest rate reduction at least sixty days in advance of it taking place.
NS&I sets its interest rates to balance the interests of its savers, taxpayers and the stability of the broader financial services sector. It said it has taken the decision to reduce the interest rate on Direct ISA following its regular review of the savings market, which includes the interest rates payable on products comparable to Direct ISA.
According to BBC News, NS&I’s Direct ISA, with its market-beating returns had been taking in more than £800m a year from savers looking to get a decent return from their cash.
Jane Platt, NS&I chief executive, said: “Interest rates in the easy access ISA market have been in decline over the year and our Direct ISA rate has stood out at the top of the best buy tables for some time.
“To ensure that we continue to strike a balance between the needs of our savers, taxpayers and the stability of the broader financial services sector, we have taken the difficult decision to reduce the rate on our Direct ISA. However customers continue to benefit from a competitive rate, and 100% security on all their deposits.”