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March 5, 2009

Sharp rise in deposits for NS&I

by Gill Montia

Story link: Sharp rise in deposits for NS&I

National Savings & Investments (NS&I) has reported a 65% rise in new deposits during the final quarter of last year.

Savers seeking a safe haven for their cash invested £9.55 billion with the government-backed provider, in the certainty that 100% of their money is guaranteed.

Inflows for October to the end of December compared with a total of £5.67 billion during the previous three month period and £3.99 billion in the April to June quarter.

On an annual basis, the growth in popularity of NS&I savings products can be tracked back to 2007/08 when deposits rose to £15.54 billion, compared with £14.17 billion a year earlier.

NS&I now has 27 million customers and for the 2008/09 financial year so far, has taken new deposits of £19.22 billion.

According to the Treasury-backed institution, the record inflow of funds is the result of the turbulence in the financial markets.

This observation is supported by its interest rates, which are not necessarily the best in the market.

Last month NS&I followed up a 0.5% cut in the base rate by reducing rates on its variable savings accounts by up to 0.75%.

Meanwhile, new customers opting for its Government-backed fixed-rate offerings lost out by up to 1.35%.

The cuts came two weeks after rates on NS&I variable accounts fell by up to 1% and returns on income bonds by up to 0.5%.

 

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