NS&I slashes rates of interest on two of its in style financial savings accounts

National Savings and Investments will slash the rates on two of its popular accounts from next month.

From 12 February, NS&I’s Direct Saver and Income Bonds accounts will both pay 3.05 per cent interest, down from 3.3 per cent and 3.26 per cent previously.

It is the first time NS&I has changed the interest rates on these savings accounts since 5 March 2025. 

The Direct Saver and Income Bonds are easy-access accounts with a variable rate which means it can go up or down. 

The Income Bonds offer a monthly interest payment while the Direct Saver pays interest yearly. 

NS&I said the rate cut was in response to ‘changes in the wider savings market’.

Reduction: NS&I has cut the rate on its easy-access accounts to 3.05% for both the yearly and monthly interest options

Andrew Westhead, NS&I retail director, said: ‘We keep all our savings rates under review as market conditions change.

‘Today’s changes will help us meet our net financing target whilst continuing to balance the interests of our savers, taxpayers and the wider financial services sector.’

NS&I is backed by the Treasury and the net financing target is the money it is tasked with bringing in. 

It comes as NS&I announced it would relaunch issues of its fixed-rate bonds with lower rates earlier this month. 

The Treasury-backed bank cut rates on one, two, three and five-year terms.

Income Bonds, which offer a monthly interest payment on a maximum holding of £1million, dropped from 4.13 per cent to 4 per cent for the one year fix.

The British Savings Bond, also known as the Guaranteed Growth Bond, fell from 4.2 per cent to 4.07 per cent.

In December the Bank of England cut the base rate to 3.75 per cent. As a result, savers have seen savings rates plummet in the month since. 

Savers can still find easy-access deals paying more than 4 per cent if they shop around, so savers do not need to put up with a rate of little more than 3 per cent from NS&I’s direct saver and income bonds. 

In the independent This is Money best buy savings tables you can get a top 4.11 per cent with Paragon Bank’s saving app Spring.

While 10 easy-access accounts pay 4 per cent or above including Cahoot, Vida Savings, Vanquis Bank and Charter Savings Bank. 

Sarah Coles, head of personal finance at investment platform Hargreaves Lansdown says: ‘For loyal NS&I savers, the move will be a significant disappointment.

‘It was always going to happen, because NS&I has a duty to offer middle-of-the-road savings rates in order to provide value for taxpayers.’