NS&I marks income bond changes

Flexibility has been added to National Savings & Investments’ Income Bond product, which will cease to apply a notice period and penalty as of 15 August.

Currently, such bond holders are required to give six weeks’ notice before cashing in their bonds, but have the option of giving no notice and paying a penalty equal to six weeks’ interest.

However, following a review of customer demands, NS&I says it will cancel both the notice period and penalty.

The move will affect some 350,000 customers with about £7bn invested in the product.

Previously, NS&I changed the notice period to six weeks from 90 days in June 2004.

What will not change is the tiered interest structure, which means customers saving between £500-£25,000 currently earn interest of 4.20% gross (4.28% AER), while those with greater savings earn a higher rate of 4.45% gross (4.54®R).

Savings limits are set at a minimum of £500 and a maximum of £1m.

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