The Premium Bond prize rate is to rise to a 15-year high next week, giving more investors the chance of winning bigger cash-outs.
Premium Bonds are a government-backed savings account, in which those holding bonds earn no interest – with the money instead entered into a monthly prize draw.
Every month, the Treasury-backed National Savings and Investments bank (NS&I) pays out millions of prizes, ranging in value from £25 to £1m.
In the next draw, set to take place on 3 July, the rate will rise from 3.3 to 3.7 per cent – changes which will see an additional £39m in prizes available for bondholders, acccording to NS&I.
While the odds of each £1 Premium Bond winning a prize will remain at 24,000 to one, the changes mean people will have more chances each month to win prizes worth between £50 and £100,000, while the estimated number of smaller £25 prizes will reduce.
Among the changes, NS&I estimates there will be 71 prizes of £100,000 in July, up from 63 in June. An estimated 141 jackpots of £50,000 will be up for grabs, up from 125 in June. The number of £25,000 prizes will also increase from 252 to around 284.
The estimated number of £1 million prizes will remain the same, at two.
“This is now the sixth prize fund rate increase for Premium Bonds in just over a year, making it the highest it’s been in over 15 years,” said NS&I chief executive Dax Harkins.
The number of larger prizes is set to increase in July— (PA Archive)
“With the changes, we’re expecting to pay out more than £374m to winners in July with more higher-value prizes, meaning that, each month, more lives will be changed by Premium Bonds.”
Given its Treasury backing, NS&I has a duty to balance the interests of savers, taxpayers and the broader financial services sector. The changes will ensure that NS&I’s products are priced appropriately when compared to the rest of the savings market, the savings giant said.
Savings rates have been increasing as the Bank of England has continued to hike its base rate – which is also at a 15-year high, of 5 per cent – in a bid to tame stubborn inflation.
NS&I has also increased the interest rate for young savers holding its Junior Isa from Tuesday, with the rate increasing from 3.4 to 3.65 per cent. More than 89,000 savers aged under 18 will benefit, it said.
Additional reporting by PA
