More than 400,000 savers are to have their incomes reduced after National Savings & Investments bucked the trend of rising savings rates and unexpectedly cut the interest rate on its tax-free cash Isa yesterday.
The Treasury-controlled savings body said it had taken the “difficult” decision to reduce the rate on its Direct Isa by a quarter of a percentage point from 1.5 per cent to 1.25 per cent, effective from November 16.
The product is yielding less than a quarter of the headline interest rate of 5.3 per cent announced by NS&I when it launched it in April 2008. It last cut the rate, from 1.75 per cent, in February.
The move is in sharp contrast to most banks and building societies, which have been