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National Savings and Investments (NS&I) have announced that the interest rate paid on NS&I's Direct ISA will rise from 5.80% per annum to 6.05% following the increase by the Bank of England in the base rate by 0.25%.

The new higher rate becomes effective immediately and is guaranteed to be at least 0.55% above base rate until the start of April 2008 at the earliest.

The NS&I Direct ISA account was launched a year ago in April 2006 and is available online and by telephone only. Customers can invest up to £3,000 each tax year and also have direct access to their account 24 hours a day. The Direct ISA also comes with the 100% capital guarantee which NS&I is able to offer because all of its savings and investments are backed by HM Treasury.

Direct ISA key features include

- The ability to invest online and by phone only with a debit card
- An interest rate which is guaranteed to be 0.55% above base rate until at least April 2008
- A consistent interest rate, without any short-term introductory bonus
- Convenience of opening and managing account online and by phone
- Minimum deposit: £1,000
- Minimum further deposit: £250 (or £100 by standing order)
- Minimum withdrawal: £250 to nominated bank account
- All interest free of UK income tax
- Direct ISA is open to new customers and those who had opened an NS&I Cash mini ISA by 5 April 2006, but it is not be possible to transfer into NS&I's Direct ISA from any other ISA provider.

NS&I are set to announce any other interest rate changes in due course.

Editors Notes:

About NS&I

National Savings and Investments is an Executive Agency of the Chancellor of the Exchequer, offering tax-free investments through ISA accounts, savings certificates and Premium Bonds.

Further information on NS&I, including press releases and product information, is available through the NS&I website or by contacting the NS&I Media Team.

NS&I PR contact:

Jonathan Akerman
National Savings and Investments
375 Kensington High Street
W14 8SD
020 7348 9433

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