The government-backed savings bank National Savings & Investments (NS&I) has cut the rate of its Premium Bond accounts from 4.65% to 4.4% today.
This popular product gives savers the chance to win prizes worth from £25 to £1m in a draw, and while the odds of winning remain the same at 21,000 to 1, there will be fewer bigger prizes and many more wins worth just £25.
The move, as interactive investor’s senior personal finance analyst Myron Jobson explained, is “a case of ‘my cup runneth over’ for NS&I”, which has already smashed its £7.5bn fundraising target for 2023/24 in just six months, given the popularity of its accounts.
“Put simply, NS&I no longer needs to attract new cash, and the savings bank can now afford to row back on its generous offerings,” he said. “Savers might need to brace themselves for less generous offerings from the NS&I going forwards.”
Two months ago the bank also cut the rate of its three-year green bonds by 1.75 percentage points and experts expect additional cuts going forward. Laura Suter, director of personal finance at AJ Bell, said that the only direction from here for the provider’s rates is down.
“Further cuts are certainly around the corner. NS&I will likely continue to bring rates down in small increments, as it gauges the popularity of Premium Bonds when savings rates are falling,” she said.
“Anyone weighing up whether Premium Bonds are worth it needs to consider that the expected prize fund will be significantly below the top easy-access rate. That means that even if you did get the average return from Premium Bonds, you’d be leaving money on the table compared to a conventional savings account.”
For savers that prefer conventional products, Trustnet highlights below the top savings accounts as of today with the caveat that for people who can part with their money for five years or longer, investing provides on average better returns than cash.
Based on a £10,000 lump-sum, the best easy-access savings account available is Leeds Building Society’s Shared Ownership Saver, which pays out 6.25% yearly, according to Moneyfactscompare.
In second place, Metro Bank’s Instant Access gives a monthly 5.22%.
Savers who are able to lock their money away for 12 months can receive 5.50% from Al Rayan Bank and 5.30% from Investec. They are not being rewarded for putting cash away long term, however, as the Bank rate is expected to come down.
Regular deposits of smaller sums can do the trick, however – putting up to £200 a month into Nationwide’s Flex Regular Saver will reward with 8.00% on the anniversary date, while similar deals pay 7.00% with first direct and Gatehouse Bank, 6.25% with Lloyds and 6.17 with NatWest.