NS&I today announced that it is reducing the interest rate on its Direct ISA by 0.25% to 1.25% tax-free/AER. This change will come into effect from 16 November 2015. NS&I will be notifying customers affected by the interest rate reduction at least sixty days in advance of it taking place.

NS&I sets its interest rates to balance the interests of its savers, taxpayers and the stability of the broader financial services sector. It has taken the decision to reduce the interest rate on Direct ISA following its regular review of the savings market, which includes the interest rates payable on products comparable to Direct ISA.

Jane Platt, NS&I Chief Executive, said: “Interest rates in the easy access ISA market have been in decline over the year and our Direct ISA rate has stood out at the top of the best buy tables for some time. To ensure that we continue to strike a balance between the needs of our savers, taxpayers and the stability of the broader financial services sector, we have taken the difficult decision to reduce the rate on our Direct ISA. However customers continue to benefit from a competitive rate, and 100% security on all their deposits”