National Savings and Investments (NS&I) have announced that with effect from Monday they will be cutting the interest they pay on their Direct ISA from 1.5% to 1.25%. This will have an immediate impact on more than 400,000 savers.
However we think the bigger news is that the major high street banks are to follow NS&I’s lead. Early December sees TSB cutting their interest rates and HSBC having been contacting customers about their rate reductions from January.
There are a number of reasons for this cut, including the interest rate outlook from the Bank of England and current inflation levels, both of which have conspired to keep the bank base rate at its low level of just 0.5%pa.
Looking at a long term view, rates should bounce back but the trend is worrying for clients relying upon savings income. If you are concerned and would like to look at alternative strategies for guaranteed and secure investments please do not hesitate to get in touch with Platinum.