Good news for savers as NS&I told to raise more money
NS&I has been asked to increase deposits by 500% to £35 billion
17th July 2020 11:20
by Stephen Little from interactive investor
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NS&I has been asked to increase deposits by 500% to £35 billion
There is good news for savers after the Government told National Savings and Investments (NS&I) to raise more money from its financial deals.
The move means Treasury-backed NS&I is likely to maintain its current best-buy savings deals, and could even raise rates.
Cash raised will help the Government fund its borrowing from the coronavirus pandemic.
The Treasury says it has asked NS&I to raise £35 billion from savers this year, nearly six times higher than the previous figure of £6 billion.
NS&I had planned had originally planned to cut interest rates before the pandemic struck but it scrapped this decision in May to support savers.
NS&I is popular among savers for being a very secure place to put their money.
Adrian Lowcock, head of personal investing at Willis Owen, says: "This could be good news for savers who opt for NS&I savings accounts, but as always, the key will be in the details, and specifically what rate the products will pay.
"NS&I is not guaranteed to offer the best rates in the market, and it always pays to shop around when looking for a savings account."
Since the coronavirus pandemic started savings rates have plummeted.
On 19 March, the Bank of England cut the base rate for the second time in nine days to a record low of 0.1%.
As a result of this most banks passed the base rate cuts on to their saving deals in full.
A report this week from Moneyfacts revealed that the number of savings deals on the market has reached an all-time low, with rates falling below 1% for the first time.
NS&I currently has some of the best rates around, paying 1.16% for its Income Bonds easy access account, while its Direct Saver account offers an interest rate of 1%.
Its Premium Bonds are also popular, offering savers the chance to win prizes of up to £1 million a month.
This article was originally published in our sister magazine Moneywise, which ceased publication in August 2020.
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