Savers pounce on NS&I after it ditched plans to slash rates, while other banks continue to cut theirs
Hard-pressed savers have flooded National Savings & Investments (NS&I) after its accounts topped best-buy tables.
But, as investments in the bank’s easy-access account rose by nearly a quarter, it has struggled to cope with demand in lockdown and has seen a rise in complaints in May.
A total of £3.58 billion went into NS&I’s Direct Saver, which pays 1 per cent, in the year to the end of March — the most since the account was launched in 2010.
As investments in NS&I’s easy- access account rose by nearly a quarter, it has struggled to cope with demand in lockdown and has seen a rise in complaints in May
The 24.4 per cent increase on the previous year, to £18.2 billion, compares with just a 5.3 per cent rise in money saved into easy-access accounts with big banks.
A further £3 billion poured into NS&I Income Bonds, up 16 per cent to £21.8 billion — the second largest increase on record since the bonds, which pay 1.15 per cent, went on sale 35 years ago.
In the meantime, nearly £7 billion was also invested in Premium Bonds — just behind the record of £7.7 billion four years ago.
NS&I reports that the number of its customers saving regularly has soared, putting aside an average £1,300 a month.
Savers have flocked to NS&I after it abandoned plans to slash rates, while other banks have continued to cut theirs.
Yet the amount of money NS&I aims to bring in from savers for the current financial year is £6 billion, around half the £11.6 billion (plus or minus £3 billion) of last year.
NS&I raises money for the Government as an alternative to selling bonds in the money markets.
Currently, it is the more expensive way to borrow, because interest paid on bonds is so low.
Between April and June, the Government was willing to pay over the odds in a move to support savers. This week, NS&I was unable to say whether this will continue, so its rates could fall.
An NS&I spokesman says: ‘The target, which is set by HM Treasury, will be subject to in-year revision to reflect government finance requirements arising from Covid-19.’
However, customer complaints continue to rise. In May, they hit 2,384, up two-thirds on the 1,433 in the same month last year.
Dave Gibson, 68, from Stroud, Gloucs, was kept on hold for 40 minutes when he rang the bank to discuss a missing Premium Bonds payment of £5,000. He says: ‘It was very stressful when I didn’t know what had happened to the money.’
An NS&I spokesman apologised to those having issues, adding: ‘We ask customers to use the NS&I website where possible.’