National Savings and Investments (NS&I), the government-backed savings provider, has announced an unwelcome change for millions of account holders, confirming it will reduce interest rates on two of its popular savings products from next month.
Rate Reductions Confirmed for February Implementation
The Treasury-backed institution revealed that both its Direct Saver and Income Bonds will see their rates decrease from 3.3 per cent down to 3.05 per cent. These revised rates are scheduled to take effect from Thursday, February 12, 2026, marking the first change to these products since March 5, 2025.
NS&I, which also manages the famous Premium Bonds, confirmed the adjustments in an official statement, noting that both affected products are easy-access, variable savings accounts that offer complete capital security through HM Treasury backing.
Official Statement from NS&I Leadership
Andrew Westhead, NS&I's retail director, explained the reasoning behind the decision: "We keep all our savings rates under review as market conditions change. Today's changes will help us meet our net financing target whilst continuing to balance the interests of our savers, taxpayers and the wider financial services sector."
The organisation emphasised that it regularly evaluates its savings offerings in response to evolving financial market conditions, with these particular adjustments designed to maintain equilibrium between customer benefits and broader economic responsibilities.
Financial Experts Weigh In on the Changes
Sarah Coles, head of personal finance at investment platform Hargreaves Lansdown, provided analysis of the situation: "Premium Bond holders will be glad NS&I has chosen this approach, rather than cutting the Premium Bond prize rate. However, they're not out of the woods just yet."
Coles further cautioned: "NS&I will have an eye on ensuring the prize rate isn't offering significantly more than the easy access market, so if we see more widespread cuts, Premium Bonds could be next for the chop."
Understanding NS&I's Position in the UK Savings Market
As one of Britain's largest savings organisations, NS&I serves more than 24 million customers across the United Kingdom with a comprehensive range of savings and investment products. All NS&I offerings provide 100% capital security due to the institution's Treasury backing, making them particularly attractive to risk-averse savers.
The organisation clarifies on its website that the Annual Equivalent Rate (AER) allows for straightforward comparison between different financial products and institutions. When interest is credited annually, the quoted rate and AER remain identical, providing transparency for consumers evaluating their savings options.
These forthcoming rate reductions come during a period of significant scrutiny for savings providers across the financial sector, with many institutions adjusting their offerings in response to broader economic pressures and changing market conditions.
