However, National Savings and Investments is now looking a little less rosy as a place for canny savers to put their cash savings, with rates being reduced towards the sort of poor levels seen in high street banks and building societies, and the payout ratio on the Premium Bonds looking less attractive.
According to National Savings and Investments (NS&I), this followed the reduction in interest rates across the savings market after the Bank of England’s reduction of the base rate by 25 basis points, to 0.25 per cent in August 2016.
Previously, the bank base rate had been at 0.5 per cent since March 2009.
The variable rate changes will apply to Premium Bonds, Direct ISA, Direct Saver and Income Bonds, coming into effect on 1 May 2017.
Further, this means there will be fewer Premium Bond prizes in each draw. The big one - £1m - will have the same number of winners but further down the scale, fewer and fewer prizes will be announced each month.
According to Steve Owen, acting chief executive of the NS&I, he appreciated "savers will be disappointed".
He told the press: "Savers will be disappointed, but we believe that the new rates present a fair offer to customers, who will continue to benefit from our 100 per cent HM Treasury guarantee on all holdings, as well as tax-free prizes for Premium Bonds."
The number of tax-free prizes is also set to go down on NS&Is Premium Bonds, however, which means the number of £25 increments I get (they're giving me the £1m bonus prize, but in £25 increments over my lifetime, evidently) will decrease.
Essentially, the government is screwing us slowly and imperceptibly.
And not everyone was as sanguine as Mr Owen. Danny Cox, who is a chartered financial planner for Bristol-based advisory firm Hargreaves Lansdown, called it "another devastating blow for millions of savers".
He said: "NS&I will remain popular for their cast iron security but lower interest rates and rising inflation will test savers’ patience and I expect more people to look to the stock markets for some of their cash to improve their long term returns."
NS&I Prize breakdown: Then and Now
Value of prizes
|
Number of prizes in February 2017
|
Number of prizes in May 2017 (estimate)
|
£1,000,000
|
2
|
2
|
£100,000
|
3
|
2
|
£50,000
|
6
|
6
|
£25,000
|
11
|
9
|
£10,000
|
31
|
23
|
£5,000
|
58
|
47
|
£1,000
|
1,390
|
1,276
|
£500
|
4,170
|
3,828
|
£100
|
70,950
|
20,729
|
£50
|
70,950
|
20,729
|
£25
|
2,076,942
|
2,172,842
|
Total
|
2,224,513
|
2,219,493
|
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