Sep 21, 2020 | BEN WAITE
NS&I have today announced that they will be dramatically reducing the interest paid on saving accounts at the end of November (24th to be exact).
You might see some doom and gloom headlines about this over the coming days, so, we wanted to give you the facts – without the fear factor.
Over the years many people, including clients of CW, have turned to NS&I for easy access savings and good interest rates. In recent months, as other banks and building societies have reduced their rates, even more people have flocked to their products.
Now, in a surprise, but expected announcement NS&I have stated their rates will reduce as follows:
Next steps – what not to do
It’s been a challenging year for investors, and we understand you might be feeling like you can’t take any more hits. However, it’s extremely important not to make emotionally fuelled decisions, especially at times like these.
Avoid these common moves:
– Jumping ship and moving to a challenger bank or institution offering a higher interest rate – this can be risky when you don’t know much about the credit worthiness.
– Financial Services Compensation Scheme (FSCS) protection works on a per person per institution basis. A number of banks are parent companies with various institutions under them, all covered by the same FSCS license – therefore restricting your protection.
– Remember risk and reward are related. Don’t let reductions in interest rates drive riskier investment decisions in the search for higher income – such as corporate bonds or even high yielding company shares.
A positive side
It’s worth mentioning that NS&I have been a risk-free option for investors over the years offering a competitive rate of interest.
Although the rate reductions are disappointing, it’s a positive that they remained so high for as long as they did – particularly considering the Bank of England’s base interest rate has been sitting at 0.1%.
You need to take a moment to consider your position before deciding whether to move your money. Any decisions should be made in the context of your long-term financial plan and your need/tolerance to taking risk.
If you’re concerned please get in touch for individual advice so you can make the best choice for you and your personal financial situation.
This communication is for general information only and is not intended to be individual advice. You are recommended to seek competent professional advice before taking any action.