The Bank of England base rate cut has been passed on by the savings giant.
National Savings & Investments (NS&I) has dropped the interest rate paid on its fixed-term British Savings Bonds after the latest Bank of England base rate cut.
The new annual equivalent rate from both the one-year growth and income options now stands at 4.07%, down from the 4.2% on bonds issued in November.
Two-year bonds have dropped from 4.1% to 3.98%, while the biggest change comes for those looking to lock their money away for three years. The rate here has dropped from 4.16% to 4.02%.
Those looking to put cash away for even longer can get 3.98% on a five-year bond, down from 4.08% in November.
“Today’s changes reflect changes in the wider market and will help NS&I to meet its net-financing target while continuing to balance the interests of savers, taxpayers and the broader financial services sector,” the firm said.
British Savings Bonds come in two forms: Guaranteed Growth and Guaranteed Income. The former is a lump sum investment that earns a fixed rate of interest over a set period of time, while the latter pays out monthly income at a fixed rate.
Funds cannot be withdrawn early with fixed-term accounts, and savers need a minimum investment of £500. They can invest a maximum of £1m per person in each Issue. After the fixed-term period, savers will have the choice to withdraw their cash or reinvest it into a new term.
The lower rates come despite NS&I struggling to meet its finance goals. In the first half of the financial year, it raised £3.9bn, with a full-year target of £13bn. This leaves it some way short of the target at the halfway stage.