UK state-owned bank National Savings & Investments (NS&I) plans to pass on the full base rate rise by the Bank of England onto consumers and will shorten the odds on Premium Bond prizes.
The BoE last Wednesday lifted interest rates for the first time in a decade by 25 basis points to 0.5% from 0.25% in an effort to curb rising inflation, which reached a five-year high of 3% in October, well above the central bank’s 2% target.
A weaker pound following the Brexit has been responsible for the jump in inflation, putting a strain on disposable incomes and resulting in a slowdown in consumer spending.
Rates to rise across its variable product range
In a boost to hard-pressed savers, NSI said its rates will rise across its variable product range from 1 December, including its Direct Isa, Income Bonds, Investment Account and Junior Isa.
The Direct Isa will increase from 0.75% to 1.0%, Direct Saver from 0.7% to 0.95% and Income Bonds from 0.75% to 1.0%. The Investment Account will rise from 0.45% to 0.7% while the Junior Isa will climb from 2.0% to 2.25%.
Ian Ackerley, chief executive at NS&I, said: “NS&I is pleased to be able to offer savers increased rates across our variable products.
By reflecting the change in the base rate we are continuing to meet the needs of savers, whilst also balancing the interests of taxpayers and the stability of the broader financial services sector.”
Premium Bond prizes
NSI also plans to shorten the odds on Premium Bond prizes from 30,000 to one, to 24,500 to one.
The prize fund rate for Premium Bonds will also rise from 1.15% to 1.4%.
“For our 25million customers, including around 21million Premium Bonds customers, these changes will present a welcome boost,” Akerley said.
“NS&I will be giving out the largest number of Premium Bond prizes every month, an estimated 2.9million, and all money invested is 100% secure, as NS&I is backed by HM Treasury.
Lloyds Banking Group PLC (LON:LLOY) also announced on Thursday that it will add 0.15% to its savings rates, including its Cash ISA Saver.
