National Savings & Investments (NS&I) quietly cut the astounding 5.15 per cent rate it was offering to more than a quarter of a million savers on Friday.
The high-paying bond was on sale for just five weeks and was available to the 225,000 savers who snapped up Guaranteed Growth or Income Bonds last summer.
NS&I was offering 5.15 pc to customers who fixed for one year or 5.03 per cent for those who preferred monthly interest.
On Friday, the Treasury-backed bank cut the rate to 4.75 per cent for those yet to roll over their savings into another one-year Guaranteed Growth Bond, or 4.65 per cent for those who want monthly income.
Smashed: NS&I quietly cut the rate it was offering more than a quarter of a million savers
The 5.15 per cent rate was astoundingly good value, with banks rushing to slash their deals after the Bank of England cut the base rate from 5.25 per cent to 5 per cent last month.
It was a ‘grab it while you can’ rate, which I predicted would not stay around for long – and it didn’t.
It was on offer from July 25 until August 30. These NS&I one-year bonds are not on general sale. They are only available if you have a Guaranteed Growth or Guaranteed Income Bond with NS&I reaching the end of its term.
In 2023, some 225,000 savers rushed to fix at 6.2 per cent for a year and poured around £10billion into these bonds.
They were on sale from August 30 to October 6, and started to come to the end of their one-year term last week.
As current bonds come up to maturity, the 5.15 per cent rate was appealing to savers tying up their money for another year.
NS&I has been writing to savers at least 30 days before their bonds mature offering them the new rate. It started sending letters out on July 25 with the 5.15 per cent offer.
If your letter is dated before August 30, you’ll get the higher rate. If it is dated on or after then, you will get 4.75 per cent.
By my reckoning, anyone who bought the bonds last September should be able to get the higher rate.
The new rate is disappointing but not so bad compared with the rest of the market. Banks and building societies have been cutting their rates too.
The top one-year fixed-rate bond comes from Union Bank of India at 5.05 per cent.
Access and Atom offer 5 per cent and several banks including Ford Money, SmartSave, Close Brothers, Cynergy and Investec pay between 4.8 per cent and 4.93 per cent.
NS&I is popular because you can save £1million, protected by the Government. Under the Financial Services Compensation Scheme, other banks and building societies offer £85,000 maximum cover.
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