NS&I under fire as rivals offer 200 times more interest

NATIONAL Savings & Investments has been criticised for paying just 0.01pc to savers holding its “Investment Account”, with rival providers offering more than 200 times the rate of interest.

The NS&I account also fails to compete with the average rates for easyaccess accounts and easy-access cash Isas, which pay 0.99pc and 1.06pc respectively, according to data compiled by the analyst Moneyfacts.

A saver with £10,000 deposited in this NS&I account would earn just £1 a year in interest, compared with £106 in an average cash Isa.

Anna Bowes, of the analyst Savings Champion, said it was likely that older customers, who are less likely to use the internet, were missing out on better rates, given the Investment Account is postal-only.

“There is absolutely no reason why any bank should pay such a poor rate,” she said.

Ms Bowes said many older savers found it harder to compare the best deals, as the top rates frequently changed. She said: “NS&I will be hoping that its postal-only customers do not notice how much they can earn in interest elsewhere. It is outrageous.”

The top postal account was from Yorkshire Building Society, which pays 2.5pc on the first £5,000 and then 2pc on balances above that amount, according to Savings Champion.

The next-highest easy-access account is from the Islamic provider Al Rayan Bank, which offers 2.35pc – 235 times the NS&I rate. This is followed by Cambridge Building Society, at 2.1pc, according to Moneyfacts.

A spokesman for NS&I said: “We offer a range of savings accounts to suit our customers’ needs and we keep our rates under review. We are not promoting the Investment Account to new customers and have a number of accounts – such as Direct Saver and Income Bonds – that pay a better rate of interest which customers can choose as an alternative.”

The NS&I website currently says that it is not promoting the Investment Account, but invites users to contact the customer service team if they “want to find out more about it”. The Direct Saver account pays a rate of 1.2pc.