NS&I products withdrawn

NS&I Savings Certificates have been withdrawn and interest rates on NS&I Direct Saver and Income Bonds have been reduced by 0.25% with immediate effect.

The reason behind the removal of these products is due to the flood of investors seeking refuge against high rates of inflation by applying for these index-linked savings certificates.  The bonds pay RPI (currently running at around 5%) plus 1%, tax free.  The surge in demand threatened to overwhelm the government's Net Financing target as the NS&I have been worried about the amounts currently being invested and the payments required to honour these investments in future. 

Existing customers won't be affected.  The withdrawl of products is effective from 00.01 19 July 2010 and is the first withdrawl of it's kind for 35 years.

The NS&I has also cut interest rates for its direct saver and income bonds by 0.25% to between 1.45% and 1.75%.

Existing Savings Certificate holders will be able to rollover their investment into the same issue they currently hold or reinvest in another type of Savings Certificate.

For more information please see: http://www.nsandi.com/ifa/quickguide.