Premium bonds: more chance of win as NS&I ups prize fund rate again
National Savings and Investments (NS&I) has again raised the premium bonds prize fund rate, giving the 22 million holders of the government-backed savings product better odds of winning in the September draw. It is the second increase in two months, with an expert saying NS&I is "pulling out all the stops" to attract more cash from savers as competition for deposits remains strong.
The prize fund rate rises from 3.8% to 4.35% from September, improving the odds of winning per £1 bond from 22,000-1 to 21,000-1, having already been raised from 3.3% to 3.8% in July. NS&I estimates there will be 308,000 more prizes in September than this month, with the total pot up about £63m to £497m; the number of £100,000 prizes will rise from 83 to 95 and £50,000 prizes from 165 to 192, while £25 prizes are being cut from roughly 2.3m to 1.7m. Winnings remain tax-free, which can benefit higher-rate taxpayers, but bonds pay no interest and are not a guaranteed win—an AJ Bell freedom of information request found 62% of holders have never won a prize, and experts note the 4.35% figure is not a guaranteed "headline rate".
- NS&I raises premium bonds prize fund rate to 4.35% from September
- Odds of winning improve from 22,000-1 to 21,000-1 per £1 bond
- 62% of bond holders have never won a prize, AJ Bell found
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National Savings and Investments, or NS&I, is the government-backed savings organisation behind premium bonds, a product held by around 22 million people in the UK. Instead of paying regular interest, premium bonds enter each £1 into a monthly prize draw, with tax-free prizes ranging from £25 up to £1 million. How generous the draw is depends on the "prize fund rate," a figure NS&I sets and can change, which determines both the total prize money available and the odds of any individual bond winning something.
NS&I sits within a wider market where banks and building societies compete for savers' cash, so it periodically adjusts its rates and odds to stay competitive, much as a bank might change its savings rates. Because prizes are allocated randomly, a higher prize fund rate does not guarantee any particular bond holder will win, and many holders go years without a prize.