London: MILLIONS of Britons are to be hit with rate cuts and lower Premium Bond prizes, after the Government’s savings provider took the axe to returns.
NS&I (National Savings and Investments) is slashing rates from May 1 in a move that will affect 21million customers.
Premium Bonds, the Direct Isa, the Direct Saver and Income Bonds are to all see reduced payouts in the mass cull.
The provider blamed the Bank of England base rate drop, which fell to 0.25 per cent in August.
Under the changes, the estimated number of Premium Bonds in May will be 2,219,493, down from 2,224,513 in February.
And the total value prizes in May will fall to an estimated £63,810,400 from £69,516,050 this month.
NS&I’s Direct Isa fall from one per cent to 0.75 per cent, and its Direct Saver will pay 0.7 per cent from 0.8 per cent.
Income Bonds will drop to 0.75 per cent from one per cent.
Steve Owen, acting chief executive, NS&I, said: “The new rates reflect current market conditions and allow us to continue to strike a balance between the needs of our savers, taxpayers and the stability of the broader financial services sector.
“We appreciate that savers will be disappointed, but we believe that the new rates present a fair offer to customers, who will continue to benefit from our 100 per cent HM Treasury guarantee on all holdings, as well as tax-free prizes for Premium Bonds.”
Money held with NS&I is backed by the Treasury.