Page last updated at 08:47 GMT, Tuesday, 14 October 2008 09:47 UK

Interest rates cut again by NS&I

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NS&I is government-backed so savings are 100% secure

A government-backed saving scheme has announced interest rate cuts on some of its savings deals for the second time in a week.

National Savings and Investments (NS&I) will reduce interest paid on most of its variable rate deals by half a percentage point from 22 October.

It comes after the Bank of England cut interest rates to 4.5% from 5%.

Last Tuesday, NS&I cut rates on some deals by 0.2%, saying it had witnessed a rise in business from savers.

If provides a 100% guarantee on deposits, unlike most UK financial institutions where the safety threshold is a recently-increased figure of 50,000.

The interest rate of its Direct ISA decreased on 8 October, while changes to Premium Bonds will take effect from 1 November and Income Bonds from 6 November.

The odds of winning a prize with each 1 Premium Bond will lengthen from 22,000 to one, to 24,000 to 1.

"This means that someone with the maximum 30,000 invested could, with average luck, win 15 prizes a year," a NS&I spokesman said.

Two 1m tax-free jackpot prizes are awarded each month.

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