NS&I to cut interest rate on ISA in blow for 400,000 customers

11th November 2015


National Savings and Investments (NS&I) is cutting the interest rate on its Direct ISA from 1.5% to 1.25% on Monday 16 November.

Tashema Jackson, money expert at uSwitch.com,  the comparison website says: NS&I’s decision to slash the interest rate on its Direct ISA is a real blow for its 400,000 savers. Sadly, this rate drop has been mirrored across the easy access ISA market, with the average rate plummeting last month to 1.11%.

“While ISAs do offer tax benefits, savers should consider all options – including high interest current accounts. Many of these offer such competitive rates that people could make more from their money than they would get from an ISA, even after paying tax on the interest earned. Nationwide’s FlexDirect and TSB Classic Plus Account both pay 5% on balances of up to £2,500 and £2,000 respectively. The cherry on top is that new customers will enjoy an extra £100 just for switching.”

Provider Interest rate Other info
Nationwide FlexDirect 5%
  • 5% interest on balances up to £2,500 for first 12 months
TSB Classic Plus Account 5%
  • 5% interest on balances up to £2,000
  • 5% cashback available on first £100 spent on qualifying purchases
  • To earn 5% AER pay in £500 a month and use internet banking paperless statements and paperless correspondence
Santander 123 Account 1-3%
  • 1% interest on balances over £1,000, 2% over £2,000, and 3% interest on balances over £3,000 up to £20,000
  • 1% cashback on water and council tax, 2% cashback on gas and electricity, 3% cashback on mobile and internet, phone and TV
  • Monthly fee of £2, but increasing to £5 from 11th January

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