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Owners of Premium Bonds have been told their chance of winning will get worse from the December draw.
The Government-backed provider NS&I said the Premium Bonds’ odds of winning will change from 21,000 to one to 22,000 to one.
Some savings rates will be chopped by NS&I in what it said is a response to a “changing savings market”.
There will still be an estimated two prizes of £1 million in the December draw, the same as in October, but in total there will be an estimated 5,726,438 prizes worth £435,686,300 in December, down from 5,991,306 prizes worth £461,330,525 this month.
The prize fund rate for Premium Bonds will change to 4.15% in December, down from 4.40%.
For the first time since November 2020, NS&I will reduce interest rates for Direct Saver and Income Bonds.
From November 20, the variable interest rate for Direct Saver and Income Bonds will change to 3.75% AER (annual equivalent rate), from 4.00% currently.
A new two-year issue of British Savings Bonds has also gone on sale offering 4.10% AER for the Guaranteed Growth Bond option and 4.09% AER for the Guaranteed Income option, both down from previously offered rates of 4.25%.
The Bank of England base rate was recently cut and further reductions are expected to follow.
NS&I, which is backed by the Treasury, has a duty to balance the needs of savers, taxpayers and the wider financial market.
Andrew Westhead, NS&I retail director, said: “As the savings market continues to change, we need to lower the rates on some of our products to help us meet our net financing target, while also ensuring we continue to balance the interests of our savers, taxpayers and the broader financial services sector.
“Even with the changes, we’re still expecting to pay out over 5.7 million prizes worth over £435 million in the December Premium Bonds draw.
“Our portfolio of both fixed and variable rate products, plus the unique position of Premium Bonds, continues to give savers the choices they need to help reach their savings goals, backed by the safety and security of our 100% HM Treasury guarantee.”
Sarah Coles, head of personal finance, Hargreaves Lansdown, said: “The Premium Bond prize rate has finally been hit with the business end of the savings rate scythe, as NS&I has followed the rest of the easy access savings market by cutting the chances of a win.
“This was always going to happen eventually. NS&I has a duty not to overpay for the money it raises for the Treasury, which means the prize rate needs to be middle of the pack within the easy access savings market.
“After the Bank of England rate cut, these have been heading downhill, albeit impressively slowly. Moneyfacts figures show the average easy access account is currently offering 3.04% – compared to 3.13% two months ago, and Premium Bonds have finally succumbed.
“Of course, the prize rate doesn’t reflect what you’ll make in these bonds, and because of the lumpy way that prizes are awarded, the average person with £1,000 in bonds will still win nothing in the average month.
“The lengthening of the odds of a win should be food for thought for anyone who is holding money in these accounts and losing money after inflation.”
Referring to the rate reductions on the new launch of British Savings Bonds, Ms Coles added: “You can do far better elsewhere, with the best on the market offering 4.6%.
“And while the Treasury guarantee of your savings and the attraction of the brand will go a long way, for plenty of people it’s not going to make up enough ground. These bonds look unlikely to shake or stir anyone.”
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