National Savings and Investments ups rates

National Savings and Investments NS& I is increasing the interest rates on a wide range of its variable and fixed rate savings offers by up to 0.25% pa - the increase in response to the rise in Bank of England base rate on May 10th.

The revised interest rates on these products, including Income Bonds and Easy Access Savings Account, come in with immediate effect - the exceptions being Direct ISA, which was raised on May 10th, and Premium Bonds, which will take effect from June 1st. Inflation-beating savings interest rates, which were increased on April 25th, remain unchanged. As a result, new issues are available of products including tax-free Children's Bonus Bonds and Fixed Interest Savings Certificates.

Meanwhile, the Premium Bond prize fund rate will increase from 3.60% p.a. to 3.80% p.a. free of income tax and Capital Gains Tax. The rate increases by 0.20% because of the need to take into account tax foregone. However the prize fund rate for the special Premium Bonds prize draw for June 2007 for Bonds purchased on or before April 30th will now be 3.95%. This is because for this month only NS& I will pay out 5 jackpot prizes of £1 million each, to mark the 50th anniversary of the first ever Premium Bonds prize draw. From July 1st the prize fund rate will be 3.80% this applies to Bonds purchased on or before May 31st.

The odds of winning a prize will stay at 24,000 to 1, meaning that someone with the maximum investment in Premium Bonds of £30,000 could, with average luck, win 15 tax-free prizes a year.

The affect of the adjustments to the prize bands in the July 2007 draw means there will be more higher value prizes, for example the number of £50,000 prizes will rise from 33 in May to 58 in July.

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2007-05-23 10:11:56 © Moneyextra.com