NS&I cuts best-buy Isa rate

Tom Wilson
12 November 2015
National Savings and Investments (NS&I) is cutting the rate on its best-buy Direct Isa from 1.5% to 1.25% from Monday 16 November.The government-owned deposit taker, which manages savings and investments for 25 million people in the UK, said the rate cut is a response to declining interest rates offered by other banks and building societies.Bank of England figures published on Tuesday confirm Isa rates are still falling. The average rate paid on an instant access Isa was 0.98% in October, compared to 1.09% a year ago.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.”Platt added that savings with NS&I are guaranteed by the government, unlike other deposit takers which offer £85,000 protection per institution under the financial services compensation scheme (FSCS). This could become more valuable to savers in the new year, when FSCS compensation levels drop to £75,000.Currently, Moneywise’s top pick for instant access Isas is Nationwide’s Flexclusive account, which pays 1.6% AER but is only available to existing customers. Virgin Money also offers a 1.56% AER account, for customers making three-or-fewer withdrawals a year.

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