Odds to fall in bonds due to rate cut

Due to the recent rate cut there have been drastic changes to the National Savings & Investments (NS&I), as the state owed bank has re-adjusted the rate on the majority of its accounts to reflect the Bank of England cut.

With the latest cut of 4.5% to 3%, the variable NS&I savings rates for Individual Savings Accounts, income bonds, investment accounts and savings accounts have all been reduced.

Furthermore the chances of winning the 1 million pounds jackpot prize has increased from 24,000-to-1 to 36,000-to-1, although NS&I have announced that the monthly jackpot will remain at 1 million pounds, however the value of prizes will fall to 57 million pounds.

The return on the Premium Bond will fall on December 1st from 2.85 percent to 1.8 percent.

Since the fallout and nationalisation of banks and the losses due to the banking crisis in Iceland, many customers have sought refuge with NS&I as a result of the 100 percent state guarantee of their deposits.

The changes mean than the rate on Income Bonds will be cut by 1.3 percent and the cash ISA will be cut from 3.9 percent to 2.4 percent.

The NS&I have been quick to indicate that the chances of winning are still good and that the benefits are still there as somebody who has £30,000 invested should statistically win 10 prizes a year, and bearing in mind that the bond winnings are not subject to income or capital gains tax.

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