The chief executive of NS&I said the move, part of the provider’s modernisation programme, would mean customers in its T Cash Isa and Cash Isa, which currently pay 0.5 per cent, would move to a Direct Isa paying 2.25 per cent.
Ms Platt said the minimum investment would drop from £100 to £1.
Cash investments into Premium Bonds over the Post Office counter will also end from 1 April 2013. Savers can still invest by cheque and debit card at the Post Office or directly from NS&I by post, phone, online or standing order.
Ms Platt said: “From 25 May 2013 customers holding our Cash Isa will benefit from the much higher interest rate paid on our Direct Isa. There will be some changes for our customers who use the Post Office, however staff in our UK-based contact centres will be on hand to help with the transition.”
She said the changes will simplify NS&I’s range of savings and help it to deliver a 10 per cent reduction in its budget in real terms by 2015 – a requirement set in the 2010 Spending Review.
2011 – NS&I announced plans to sever its 150-year ties with the Post Office in a bid to save money and reduce its burden on the taxpayer. Instead it plans to deal with customers online, by phone and post.
Nick Evans, financial planner for Hertfordshire-based One Life Wealth Planning, said: “We keep a weather eye on National Savings. From time to time it offers some great deals, such as the savings certificates available a couple of years ago. “We will often consider Premium Bonds under the right circumstances. The cash Isa proposition is not unreasonable and made more attractive because it is a straight rate without dropping to something particularly terrible at the end of a special ‘bonus’ period.”