Other Candid sites

Candid Financial Advice
Financial advice for a fraction of the usual cost.

Compare Fund Platforms
The UK's only fund platform comparison site for private investors.

Calculator over 80 Calculators!

Covering almost all your money needs - use them.

Property Rental Yield

Calculator Will you make a profit on a rental property? This calculator helps you work out the annual yield, allowing easy comparison with other investments.

Random Jargon

Interest-Free Period Credit Card

The time between when you buy something on the card and the date when you must pay your monthly bill. Can be up to 56 days.

| Printable version | A A A |

Author Photo

National Savings Certificates withdrawn from sale

Saving | National Savings

By Justin Modray, published 19 July 2010.
Helpful? 70

National Savings & Investments (NS&I) has this morning announced that its index-linked and fixed interest savings certificates have been withdrawn from sale.

This is bitterly disappointing as NS&I Index-Linked Certificates have proved a very popular and worthwhile way to save.

What about existing Certificates?

Existing savers in these products are unaffected. The certificates will run until maturity at which time the proceeds can be rolled over into the same issue (i.e. the same rate) or one of the other certificate issues.

Why have they been withdrawn?

The announcement has been prompted by a Government target that pushes NS&I to balance the monies coming in from customers with that leaving, so as not to increase government borrowing.

With net sales of £1.6 billion over the last year (to 31 March) it seems National Savings have been too popular for their own good. However, this is far lower than the £12.5 billion of net sales in 2008/09 when the Government was only too keen to borrow (and savers were flocking to National Savings for security during the banking crisis).

What alternatives are there?

The withdrawal is a major blow to savers as there aren’t any comparable alternatives to Index-Linked Certificates. Cash Individual Savings Accounts (ISAs) are tax-free, so fixed rate cash ISAs are similar to Fixed Interest Certificates, but there are currently no inflation-linked savings accounts.

You could consider index-linked gilts, but these are quite different to savings certificates and potentially risky (see here for details) so won’t be a suitable alternative for most savers.

We may see a bank or building society try to offer a comparable inflation-linked product to fill the void, for example, Leeds Building Society offered an inflation-linked cash ISA a couple of years ago. But as the banks aren’t under much pressure to raise money (because they’re not lending that much) this may be wishful thinking.

So for the time being I think you’ll just have to shop around for the best variable or fixed rate savings account you can find, using your cash ISA allowance if available.

If you found this article helpful, please add your vote by clicking here.

Readers' Comments (3) - To post a comment please register or login .

Comment by freegreenbeans at 2:53pm on 19 Jul 2010:

A big shame as they were a good secure place to make some tax-free savings. I hope we see some new index-linked savings accounts from banks but I agree it could be wishful thinking in todays climate.

Comment by Nicholas01 at 5:17pm on 31 Jul 2010:

And all the more frustrating if we now watch the RPI sitting at such a high rate for a long time - or worse - get higher! (Yes, I was just about to up my Index-linked holding). Justin, I missed the 13 July announcement of what the RPI actually did. Is it still 5.1%?

Comment by justin at 10:08am on 02 Aug 2010:

The increase in RPI over the year to the end of June 2010 was 5%.