Martin Lewis on tracing dead relative's Premium Bonds
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NS&I is a financial institution popular with UK savers. On top of its monthly premium bonds prize draw, the organisation also offers a number of savings and ISA products.
However, recent analysis from Hargreaves Lansdown (HL) showed savers are abandoning NS&I as the savings market alters.
This comes even as the overall prospects for interest and returns improves as Sarah Coles, a personal finance analyst at HL, explained: “We’re on course to hit £1trillion in easy access savings accounts by the end of this year, and because most of it is still languishing in high street accounts, paying next to nothing, we could miss out on billions of pounds in interest.
“We need to get our savings working harder. Fortunately, the banks are so keen to get us to tie some of this money up that rates have risen.
“April was another bumper month for savers, with an extra £21billion flowing into bank accounts.
“It’s still fear driving these savings, which means the lion’s share of this cash ends up in easy access accounts, because people are worried they’ll need it in a hurry.
“It’s also pooling in accounts with the high street giants, rather than people shopping around for the best rates on the market with less well-known names.
“This means a massive chunk of missed interest, but it also creates a challenge for the banks themselves.
“They’re lending out money on long-dated mortgages and loans, using money that could be withdrawn at any second by savers. It’s one reason why smaller and newer banks are keen to get us to tie up some of this cash with them for longer, and right now they’re prepared to offer higher interest rates to get us to do so. The good news for savers is that banks have all realised they need longer term deposits at the same time, which is pushing up rates on longer term fixes. You can now fix for 12 months and earn one percent.
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HL broke down how the nation’s savings habits looked throughout March and April, and NS&I was one of the few to see negative results.
As the following details:
- Cash in accounts not paying interest: Change in balances – £6.73billion, balances outstanding- £244.6billion
- Easy access (paying interest): Change in balances – £13.84billion, balances outstanding- £928.4billion
- Fixed rate accounts: Change in balances – £2.35billion fall, balances outstanding- £153billion
- Cash ISA: Change in balances – £2.77billion, balances outstanding- £296.7billion
- NS&I: Change in balances – £4million fall, balances outstanding- £202.7billion
- Total deposits: Change in balances – £20.99billion, balances outstanding- £1.825trillion
As Sarah detailed, it is possible to get interest rates of one percent at the moment and while average rates remain low, banks are launching new deals to entice customers.
With this in mind, it is unsurprising that many are looking away from NS&I when one examines their current offers.
As it stands, NS&I offers the following products and interest rates:
- Premium bonds – one percent annual prize fund rate
- Junior ISA – 1.5 percent
- Income bonds – 0.01 percent
- Direct ISA – 0.1 percent
- Direct Saver – 0.15 percent
- Invest Account – 0.01 percent
Savings rates remain low at the moment as the Bank of England continues to keep the base rate at near zero levels.
As it stands, the base rate is 0.1 percent.
In recent weeks, the central bank detailed it planned to keep rates low in order to support the economy in the face of coronavirus.
The next base rate decision will occur on June 24 and while it cannot be predicted what will happen, many expect the Bank of England to keep the rate at its current level or even move it into negative territory down the line.
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