Savers hit as NS&I withdraw some products

| July 19, 2010 | 0 Comments

Government-backed National Savings & Investments (NS&I), which runs Premium Bonds and a variety of savings products, has today announced its Savings Certificates have been withdrawn from the market.

These saving products, which are linked to the inflation rate, have been withdrawn because sales “far exceeded” the level anticipated, said NS&I.

In the meantime, NS&I said it is trimming the interest rates paid on its Direct Saver and Income Bonds.

With immediate effect, the interest paid on Direct Saver and Income Bonds will be cut by 0.25%.

Rules mean that NS&I must not dominate the savings and investments market.

However, with the historically low interest rate environment, NS&I products have proved extremely popular as savers look for somewhere to invest their cash, and the decision will mean limited options for savers.

Commenting on the decision, Andrew Hagger, of financial website Moneynet, said: “With savings rates at painfully low levels, it is no surprise that savers have been attracted to potentially higher returns in the form of index-linked savings certificates.”

“No one knows what will happen to [inflation measure] RPI in the future, so it is not possible to say whether index-linked savings certificates will turn out to be a good investment, however at least you knew that you would always maintain the spending power of your savings.

“It is another door slammed in the face of savers who now have fewer options as they desperately seek a decent return on their nest egg,” he added.

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