NS&I offers a ray of hope for savers as Government gives it the go ahead to raise a record £40bn this year
Savers can expect top rates for a while still, after National Savings and Investments (NS&I) was asked to raise a record £40 billion this year.
NS&I has been asked to raise the cash to help pay for the Government’s costly coronavirus support packages.
The Treasury last week revised its annual fundraising target for the bank from £6 billion up to an unprecedented £40 billion.
NS&I, which offers the popular Premium Bonds, already offers some of the best savings rewards on the market as interest rates have plummeted to an all-time low
NS&I, which offers Premium Bonds, has already collected £14.5 billion in three months from its 25 million customers.
The bank offers some of the best savings rewards on the market, and experts now believe NS&I could maintain its rates for a while — despite its duty to keep the commercial savings market competitive.
Anna Bowes, from website Savings Champion, says: ‘The rates on offer should remain competitive for the foreseeable future, although as the accounts become marooned higher and higher above the rest of the market, there could still be a cut at some stage.’
NS&I announced a raft of savings rates cuts in February, including dropping the Premium Bond prize fund rate from 1.40 per cent to 1.30 per cent.
But the rate reductions were abandoned in April, due to the pandemic.
Most High Street banks now pay a pittance at 0.01 per cent on easy-access savings — meaning a £10,000 nest egg earns just £1 a year.
NS&I’s easy-access account pays 1.15 per cent — handing the same saver £115.
It is not the first time the Government has recruited the UK’s savers in a time of crisis.
Britain’s savers raised the equivalent of £30 billion in World War I with War Savings Certificates and war bonds.
All money saved at NS&I is guaranteed by the Government, whereas ordinary banks only protect £85,000.
Rachel Springall, finance expert at data firm Moneyfacts, says: ‘Now, as the country is at war with the coronavirus pandemic, the funds NS&I could raise from savers may prove a vital injection.’