National Savings and Investments (NS&I) will reduce the interest rate on its direct saver accounts by 0.25% from today.
The rate will fall from 1.75% to 1.5% on savings because NS&I has exceeded its government funding target for the year.
NS&I's net financing target for the year was £2bn. The latest forecasts suggest NS&I will deliver £4.5bn in net financing, meaning it can reduce its interest rate as it has attracted enough investment.
Jane Platt, chief executive of NS&I, said: "Since November we have seen an increase in customer deposits.
"This has been driven by a relatively small number of savers depositing large amounts of money, particularly into our direct saver account.
"Reducing the rate on direct saver was a very difficult decision. However, we have to take action to try and moderate the level of deposits into this account over the coming months."
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