Treasury-backed savings firm holds its rates while rivals make cuts
National Savings & Investments (NS&I) is a much-loved institution but rarely pays savers top rates, though in a surprise turn of events now offers some of the best deals available.
State-backed NS&I typically sets interest on its savings deals to be competitive but not the best available, to avoid putting banks out of business.
But these banks have been cutting interest on their savings rates, while NS&I has not, meaning the much-loved institution now has some of the top deals available.
NS&I Income Bonds are currently the best easy access savings product, paying paying 1.16%.
The company's Premium Bonds also pay an unbeatable one-year savings rate - at least on paper.
These deals pay an average of 1.4% a year, while even the best one-year bond would only pay 1.3%, from Atom Bank.
However, as Premium Bonds are a form of lottery, savers may get nothing.
Why has this happened?
NS&I delayed plans to cut interest rates at the start of May. It wanted to trim the rate on its Direct Saver account from 1% to 0.7%.
Rates on its Income Bonds were to be reduced from 1.16% to 0.7% and its Investment Account deals from 0.8% to 0.6%. Premium Bonds rates also faced a cut from 1.4% to 1.3%.
But NS&I decided to hold back on the reductions to help support customers during the coronavirus pandemic.
A spokesperson from NS&I says: "NS&I made the decision to support savers during this unprecedented time by not implementing planned interest rate reductions to its variable rate savings products, including Premium Bonds."
NS&I will review the interest rates it offers.
"We review the rates on all of our products regularly and recommend changes to HM Treasury when we believe they are appropriate, to ensure that we continue to balance the interests of our savers, taxpayers and the stability of the broader financial services sector," it says.
Most providers with market-leading rates slashed interest on their accounts following the Bank of England’s decision to reduce the base rate twice this year to 0.1%, its lowest level in history.
The base rate is factored into the interest levels banks pay savers, and cuts to this are almost always passed on in full.