NS&I double ISA savings rates…

Finally there is some good news for UK savers today. When the recession hit early last year, interest rates feels through the floor and anyone who had been squirreling away hoards of savings in various institutions were unfairly punished by the rate cuts. Not only did the government and the bankers cripple the economy, but in a final two fingered salute to fiscally prudent citizens, the Labour party decided to stitch up anyone with a savings account by cutting rates to help those who had foolishly overburdened themselves with debt.

Today the NS&I, the National Savings and Investment bank, a state owned institution, announced that it was doubling its rate of interest for savers from 1.2% to 2.5%. The NS&I stated that it was increasing these rates as part of a “pricing strategy designed to balance the interests of its savers, the taxpayer and the stability of the financial services market”. Last October the NS&I received a large amount of deposits due to the collapse of Icelandic bank Icesave, but now due to the recovery of the market increased competition has forced the NS&I to offer savers a bit more for their money or face losing accounts to rival banks and building societies.

According to the Guardian the NS&I need an inflow of £14bn for 2009-2010 to offset the amount of interest and prizes that it pays out annually. To achieve this NS&I are also offering better rates for their fixed-interest savings certificates and children’s bonus bonds. Due to increased rates in the private sector many savers have been encouraged to switch and save to other financial institutions, facilitating large amounts of withdrawals from NS&I schemes.