There may still be a couple of weeks until Valentine’s Day but two Premium Bonds holders are already feeling the love after each winning a £1 million jackpot prize.

The lucky bond holders, from central Bedfordshire and Liverpool, will have been contacted by NS&I's Agent Million to tell them they have banked the top prize this month.

The first jackpot winner, from central Bedfordshire, won with the bond number 489TB013219. They purchased the winning Bond in February 2022 and hold £50,000 in Premium Bonds. They are the second jackpot winner from central Bedfordshire.

The second Premium Bonds £1 million jackpot Bond number is 040QJ919368. It is held by someone in Liverpool.

They also hold £50,000 in Premium Bonds and purchased their winning Bond in October 2004. They are the fourth to win the £1 million jackpot in Liverpool.

Andrew Westhead, NS&I Retail Director, said: "Congratulations to our two jackpot winners from central Bedfordshire and Liverpool, who each start February £1 million richer. ERNIE has spread the love ahead of Valentine's Day and we hope this brings both winners and their loved ones plenty to celebrate.”

Test your NS&I knowledge with MoneyWeek's Premium Bonds quiz.

How many people won in the February 2026 Premium Bonds prize draw?

In February 2026, there were more than 6.1 million tax-free Premium Bonds prizes worth over £408 million up for grabs.

This brings the total won by Premium Bonds holders since the first draw in 1957 to £40 billion.

Premium Bonds prizes range from £25 up to the jackpot £1 million.

Some 78 people won £100,000 each this month, while 154 received £50,000, 311 will get £25,000 and £777 are due £10,000.

How to check if you’re owed a prize

The Premium Bonds £1 million prize draw winners are announced on the first working day of each month. You will be contacted and told if you have won the top prize.

Bond holders can check if they have won anything between £25 and £100,000 by using the Premium Bonds prize checker app or visiting the NS&I website the day after the first working day of each month. For this month’s draw, this is Tuesday 3 February.

To check for Premium Bonds prizes on the NS&I website, Bond holders will need their Premium Bonds holder’s number. Those using the Premium Bonds app can use their holder’s number or their NS&I number.

It is worth checking as currently there are 2,713,707 unclaimed prizes worth £114,769,950 waiting to be claimed.

In central Bedfordshire, there are currently around 10,400 unclaimed prizes worth £433,225 dating back to February 1968. The largest unclaimed prize in central Bedfordshire is worth £10,000 and was won in the January 2024 draw by a Bond holder with a holding of £100.

In Liverpool, there is a £5,000 prize from May 2023 yet to be claimed; this is currently the highest unclaimed prize in the area.

There are also 13 unclaimed £1,000 prizes dating back to November 1987.

The prospect of winning a top cash prize each month is exciting but the prize rate has dropped in recent months and your money could perform better elsewhere.

We look at the alternatives to Premium Bonds in a separate piece.

Savers have been dealt a new blow after National Savings and Investments (NS&I) cut rates on new issues of their popular fixed-term British Savings Bonds.

The state-owned savings bank today announced new issues of its one, two, three, and five year Guaranteed Growth and Guaranteed Income Bonds would go on sale with interest rates between 10 and 14 basis points lower than their previous issues.

The cuts only apply to new issues of the fixed-term bonds. Customers who put money into previous issues of NS&I’s British Savings Bonds will still receive the interest rate they initially agreed to.

The move comes just two months after NS&I bolstered savings rates on its savings bonds in November.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The autumn and winter tend to see more fixed rate accounts mature, so there’s always a risk that savers will take their money and leave. That was definitely a theme in September, when money was flowing out of NS&I.

“There’s every chance that this temporary boost was designed to stem the flow. There was actually a significant rise in savings in November, when £2.45 billion was paid into NS&I, so now those higher fixed rates have done the job, cuts were in order.”

NS&I has not changed any of the details relating to their Premium Bonds products. The annual prize fund rate is still at 3.6% after being cut in August, and the chances of winning remain at one in 22,000 per £1 Bond.

Guaranteed Growth Bond interest rates slashed

Guaranteed Growth Bonds pay a fixed rate of interest over a set period of time with interest calculated daily and added to the bond on each anniversary of the investment. They operate like most traditional fixed-term savings accounts as interest earned is reinvested.

The rates on all new issues of these bonds have been slashed by between 10 and 14 basis points.

A table showing the old and new interest rates on NS&I’s Guaranteed Growth Bonds can be found below.

Source: NS&I, 6 January

Guaranteed Income Bond interest rates cut

NS&I’s Guaranteed Income Bonds operate differently to the growth bonds as interest is not reinvested but instead paid to the bond holder.

They are a lump sum investment that pays out monthly income at a fixed rate of interest over the agreed period of time. Interest is calculated daily and is paid into the customer’s nominated bank account.

A table showing the old and new interest rates on NS&I’s Guaranteed Income Bonds can be found below.

Source: NS&I, 6 January

How do British Savings Bonds compare to other fixed-term accounts?

Though savers looking for a fixed-term deal will be left disappointed by the news, there are still many other competitive options available in the fixed-term market.

The top one year fixed term savings account from Union Bank of India (UK) pays a rate of 4.45%, according to Moneyfacts, while an account with the same term from Chetwood Bank will pay 4.26% interest.

While better deals are available on the market, NS&I is still offering an interest rate that is above the average for one year fixed term accounts.

The Guaranteed Growth Bond pays 4.07% interest and the Guaranteed Income Bond pays 4% interest – these are 23 and 16 basis points above the 3.84% average in the wider market, respectively.

Coles at Hargreaves Lansdown said: “The good news is that [NS&I’s] bonds are still offering more than they did before the November bump. However, the bad news is that they fall short of the most competitive deals in the market. The fixed rate market has held up impressively in the face of the Bank of England rate cuts – in part because the market isn’t expecting many interest rate cuts in 2026.”

As for bonds with longer terms, savers can still find better deals than those offered by NS&I. The top two year fixed account pays 4.16% interest, the top three year pays 4.21%, and the top five year account pays 4.31%.

As NS&I is a savings bank run by the government, the money you hold in its products is effectively 100% safe as your savings are guaranteed by the government. The only way your money could be in jeopardy is for the UK government to go bankrupt, which is incredibly unlikely to happen.

We list the best savings rates right now in a separate piece.

One-year fixed savings accounts have been among some of the best savings deals over the past few months following a string of interest rate hikes, with rates reaching above 6%. But the latest signs show they might have reached their peak. 

Since the Bank of England put a halt to interest rate rises in September and then kept them frozen at 5.25% again earlier this month, the top one-year fixed savings deals have taken a hit. The best rate fell below 6% on 10 November. 

Previously, our best-buy table had seen one-year fixed deals reach 6.2% with NS&I’s one-year fixed bond, but this got pulled in early October. Currently, Metro Bank offers the top one-year deal at 5.91%. 

Find out if one-year fixed savings rates have passed their peak and how they compare to the rest of the market. 

Have one-year fixed savings rates reached their peak? 

It’s been a great few months for savers, with one-year fixed-rate savings deals reaching the dizzy heights of 6% or more - the best rates we’ve seen in 15 years. 

On 14 September, the top 10 savings products on our one-year best-buy table all boasted rates of 6% or above, NS&I topped the table with its 6.2% rate, followed by Union Bank of India with 6.11% and Ahli United Bank UK with 6.1%. 

It meant one-year fixed savings overtook the best easy-access savings accounts, which were offering just over 5% at the time, and one-year cash Isas, which remain at around 5.5%. 

But, MoneyWeek research shows there have been no rate rises on one-year fixed savings since 9 October, and the top rates fell below 6% on 10 November. 

Rachel Springall, finance expert at the comparison site Moneyfacts, said: "Month-on-month the average rates across fixed-rate savings bonds and ISAs have fallen, and there are no longer any providers offering a fixed-rate bond that pays over 6%.”

Union Bank of India was the last provider to offer a rate above 6% on a one-year fixed deal, which has now dropped to 5.9%. Here are some providers that offered above the 6% mark in the last couple of months, and what they currently offer now:

Sarah Coles, head of personal finance at the wealth manager Hargreaves Lansdown, believes a 6% rate won’t see light in the near future. “We’re past the peak for savings, with the most competitive fixed rates across all periods now dropping below 6%. 

“Fixed savings rates depend to a great extent on rate expectations, and as more players in the market come to the conclusion that we’re unlikely to get rate rises from here, we can expect fixed-rate savings to continue their slow march south. There won’t be any really dramatic shifts until the market widely expects rate cuts, so there is still time to bag a decent deal.”

How do one-year fixed savings deals compare to the rest of the market?  

Currently, the top one-year fixed-rate deal is 5.91% AER offered by Metro Bank. The account requires a minimum deposit of £500 and you can save up to £2 million. 

If you’re on the hunt for an account with a lower minimum deposit, JN Bank is offering 5.9% AER and you can start saving with £100. Union Bank of India is also offering 5.9%, however, it requires £1,000 to open the account. 

It’s worth looking at Isas too as you can save up to £20,000 each tax year tax-free - which could be handy if you’re worried about paying tax on your savings interest due to high interest rates. 

Plus, Isas could become more attractive with rumours of Isa reforms to be announced in next week’s Autumn Statement.

The top one-year cash Isa is currently 5.85% from Virgin Money, but you need to hold a Virgin Money current account to be eligible. The next best one-year Isa is from Zopa, offering 5.61% and you can start saving with just £1. 

Charter Savings Bank is also offering 5.61% on its one-year fixed Isa, but it requires at least £5,000 to start saving. 

Read more on which is a better home for your money- a savings account or a cash Isa? 

National Savings and Investments (NS&I) has cut the rate on its popular Green Savings Bonds amid expectations that interest rates have peaked.

The state-backed bank has released a new issue of its three-year Green Savings Bond at 3.95%, down from 5.7%.

The rate had only just been raised in August from 4.2%.

It comes as the Bank of England held interest rates for the second consecutive month, prompting speculating that the cost of borrowing could remain steady for now.

That could mean the higher interest rates that savers have been enjoying in recent weeks could start to dissipate.

HOW MUCH CAN YOU SAVE IN NS&I GREEN BONDS?

NS&I’s Green Savings Bonds were launched in 2021 to help savers fund green government projects across the UK.

The minimum investment in Green Savings Bonds is £100, with a maximum limit of £100,000 per person for each issue.

Investors need to be aged 16 or over to purchase the bonds and the full amount deposited will be held for three years and cannot be withdrawn during this time.

This means you need to be happy to have your money locked up for an extended period.

Interest is calculated daily and added yearly on the investment’s anniversary date, but paid at the end of term.

You can purchase the bond online at nsandi.

IS THE NEW NS&I GREEN BONDS RATE ANY GOOD?

The rate paid on NS&I’s Green Bonds at launch was a paltry 0.65% but it has improved recently in line with other savings deals, reaching 5.7% in August.

The 5.7% rate was competitive, up from the 4.2% offered in February, and sat among the best buys for a three-year savings bond.

But the new rate of 3.95% moves NS&I down the savings tables.

For someone with £10,000 saved, that’s a loss of £577 in interest across the three years.

In comparison, savers can earn 5.9% with JN Bank over three years with a minimum investment of £1,000 or 5.61% with Zopa.

Similar to the NS&I product, no withdrawals or early access is allowed but you need to be age 18 or over to open an account.

There are benefits to sticking with NS&I though.

It is backed by the Treasury so all your savings are protected, compared with other banks where up to £85,000 is covered by the Financial Services Compensation Scheme.

Some savers may also be happy to receive a lower rate in return for backing green projects.

However, there are other green savings accounts such as Triodos Bank, which offers a 3.45% easy access account or an Ethical Savings Bond paying 4.25% for one year and 4.5% for two.

"After a fairly dismal summer for inflows, we know that NS&I’s guaranteed bonds attracted a huge amount of savers' money – meaning the provider has already hit its funding target for the year," says Laura Suter, head of personal finance at AJ Bell.

"In turn, that means its other savings products will become less attractive, as it doesn’t need to use high rates to lure more savers in.

 "The rate is below some of the other environmentally-focused accounts on the market, many of which don’t require a three-year tie-up to beat the rate. 

"Anyone hunting around for a green savings option needs to scrutinise the competition carefully, to ensure that what they are doing with their money tallies with their own beliefs."

Charles Stanley Direct is the latest investment firm to launch a ‘one-stop-shop’ savings platform, allowing savers to effortlessly take advantage of the most competitive savings rates on the market with one online account. 

This could be an ideal option for time-poor savers who want to keep on top of the market. Indeed, while savings rates are at a 15-year high the best deals don’t stick around for long. 

As MoneyWeek has reported, the best savings rates only stick around for a limited time so you have to be quick. Santander’s top easy access saver was pulled a week early, NS&I’s top one-year fixed ended after just a month and HSBC’s one year fixed bond was pulled after five weeks of being on the market. 

John Porteous, Managing Director of Charles Stanley Direct, says: “The best way for cash savers to capitalise on today’s higher rates is to use a savings platform to secure highly competitive interest and move easily between offers and account types from different banks as rates change and needs evolve.”

We take a look at how the new savings platform from Charles Stanley Direct works. 

What is Charles Stanley’s Cash Savings platform?  

The savings platform, Cash Savings claims to be a ‘one-stop-shop' for savers to stay on tops of competitive savings rates with one online account. 

However, the rates available to savers aren’t based on whole of market. This means you’re not guaranteed to get the best rate out there. Instead, rates are based on which savings providers and building societies work with Charles Stanley. 

This is a pretty typical approach, used by other providers that also offer similar savings aggregator accounts. 

Data from Which? shows Hargreaves Lansdown Active Savings offers rates from 14 savings providers, Interactive Investor Cash Savings offers rates from more than 25 savings providers and Aviva Save has rates available from 15 providers. 

Charles Stanley told MoneyWeek there are presently 34 cash savings products from 8 different institutions on the platform currently and the number is likely to expand over time.

You can check our best buy guides on easy access savings and one-year fixed savings to see the best rates on the market right now. 

How does the cash savings platform work?

The savings platform is open to new and existing Charles Stanley customers. 

You will be required to open your account via the Charles Stanley Direct Investment Service app. Here, you can create and set up your Cash Savings account.

You’ll be asked to deposit your funds into a ‘holding account.’ Then, you will have the option of putting those funds into either a fixed savings account, easy-access saver or a notice savings account. 

You can start saving with as little as £1, but, and here’s the catch, that won’t give you access to all accounts. Some accounts will have higher minimum deposit levels, which are set by the underlying provider. 

Once the account is open, you will have the flexibility to view the different rates available and switch to a higher-paying saver. 

There is no fee to hold the account with Charles Stanley, but Bondsmith, the platform host will take a 0.1% share on any interest earned on your savings.

Plus, any interest earned is paid gross, so you may need to pay tax on interest earned. To make things simple, Charles Stanley gives you one consolidated tax certificate for all cash savings at the end of the tax year, which you can use when you complete your Self-Assessment Tax Return. You can find the certificate on your online statement. 

Up to £85,000 of your funds are protected by the Financial Services Compensation Scheme (FSCS).

But what rate is Charles Stanley offering and how does it compare to the rest of the savings market? 

How does Charles Stanley’s saving platform compare to the rest of the market?  

The most important thing to note here is that Charles Stanley's offering is not whole of market - meaning the top rates are only available to you if a bank is on its platform. This also means you could actually get a better rate elsewhere. 

These are currently the rates Charles Stanley is offering: 

Although these rates feature on our best buy tables, they are not the best savings rates on offer. At the time of writing (3 November), these are the top savings rates on the market. 

So, Charles Stanley’s top easy access rate is 0.7% lower than the best rate on the market, and its one-year fixed undercuts the top rate on the market by 0.1%. 

This can be expected, as the platform will only offer rates from savings providers that Charles Stanley is partnered with. If you are thinking of opening a Cash Savings account, it’s always worth comparing its rates with the top rates on the market. 

Plus, if you’re worried about paying tax on interest earned if you’re savings goals are quite big, you could look at an alternative- a cash ISA which will give you a £20,000 tax wrapper. 

Find out where it’s better to put your money - in a cash ISA or savings account. 

Holders of NS&I Premium Bonds can check now to see whether they have won a prize in the November prize draw.

The government-backed savings provider has repeatedly increased the number of prizes on offer in recent months, so even if you don’t manage to land the £1m top prize, there are still lots of smaller prizes available for savers in every draw.

In August NS&I increased the Premium Bonds prize rate to 4.65% to 4%. The prize rate is essentially a steer on what sort of return you would get from Premium Bonds if you have average luck, rather than any guarantee, but with the higher sums now in the overall prize fund the odds of winning money have improved from 22,000 to 21,000 to one.

Two bondholders will get a visit from Agent Million on account of landing the top prize, but there are millions of prizes of other sizes that could be heading your way. In the November NS&I Premium Bond prize draw there were more than 900 prizes of £10,000, over 56,000 £500 prizes and around 2.3 million £100 and £50 prizes.

Here’s how to check your Premium Bonds for the November draw.

HOW TO CHECK FOR NOVEMBER’S NS&I PREMIUM BONDS DRAW?

You can check from now to see if you have won a prize in the November Premium Bonds prize draw.

There are a couple of different ways of checking, from using the prize checker page online to logging into the NS&I prize checker app. 

Checking is easy to do, you’ll just need the bond number to hand. These checks allow you to go back to draws which have occurred over the last six months.

Another option is to set up your Amazon Alexa smart speaker with the prize checker skill, which you can do through the Alexa app, and enter your NS&I number. From that point onwards your Alexa will keep you updated on any winnings.

A total of 5,795,962 prizes will be paid out in Premium Bond prizes in November, worth a total of £471,646,425. There were 121,715,206,105 Bond numbers eligible for the draw.

Here are the details of the NS&I Premium Bond prize draw for November:

HOW WILL MY PREMIUM BOND PRIZE BE PAID TO ME?

Winners will see their prize paid into their designated bank account, though you can choose to have the money reinvested into more Premium Bonds. You can set up automatic payments on the NS&I website.

Opting for the reinvestment route boosts your chances of winning in future draws, since you have more eligible bonds. It also means you do not risk having unclaimed prizes sitting around.

HOW TO CHECK FOR UNCLAIMED PREMIUM BOND PRIZES? 

Every year, millions of Premium Bond prizes go unclaimed. If you have not checked whether you’ve won money for some time, then there are a few different ways of finding out whether you have any cash waiting to be claimed.

If you’re registered for online or phone services, you can call NS&I for free on 08085 007 007.

If you aren’t registered, you can write to NS&I and ask if you have any unclaimed prizes.

To help the process, it’s a good idea to include the following information:

• Premium Bonds holder's number
• Your current name
• Any previous names
• Your current address
• Any previous addresses where Bonds may have been registered
• Your signature

You can then send your letter to: NS&I, Sunderland, SR43 2SB.

If you have any outstanding prizes, then they will not be sent directly to your bank account. Instead they will be posted to you at your home address. 

National Savings and Investments (NS&I) is one of the best-known names in the UK savings market. The treasury-backed provider is popular for its Premium Bonds.

While NS&I products don’t currently beat the interest rates offered on the best savings accounts, there are some reasons why the government-backed savings provider could be appealing.

For instance, Premium Bonds prizes are tax-free, and while there’s no guarantee you’ll win in the prize draw, those who have maxed out their ISA and personal savings allowance could find they’re a good way to shield savings from the taxman.

You may be wondering if NS&I could be a good destination for your money. So, how safe is NS&I? Can you trust it to look after your money? Here's everything you need to know.

Is NS&I safe?

Yes, NS&I is very safe. It’s backed by the UK government (specifically, HM Treasury), which means all savings are guaranteed 100% by the government. This is the case because NS&I is essentially an arm of the government.

When the government is spending more than it receives in taxes, also known as a budget deficit, it has to borrow money to fill the gap. This borrowing is usually done by issuing what are known as gilts or bonds. These IOUs have to be paid back with interest over a set period of time – usually decades. The government has only defaulted (not paid its debts) on these obligations once, and that was way back in the 1400s.

The government also borrows via NS&I. Every year when Treasury ‘bean counters’ are trying to work out how much the country will need to spend and borrow, they charge NS&I with raising a percentage of the borrowing total.

It is generally cheaper for the government to raise money via NS&I than on the international debt markets.

Can NS&I go bankrupt? 

Due to its structure, NS&I can’t go bankrupt. For savers’ money to be in jeopardy, the UK government itself would have to be on the verge of bankruptcy. If that happens, savers would have bigger problems to deal with (for example, who’s going to pay for the NHS and police?).

There’s also no chance NS&I will be taken over by another bank or private equity firm. It’s highly unlikely the government would decide to sell it off as it wouldn’t want to lose control of that much public debt.

So, NS&I can’t go bankrupt, nor can it run out of money. That means any savings you have with the institution are 100% guaranteed.

By way of comparison, only £85,000 of your savings are covered under the standard Financial Services Compensation Scheme (FSCS).

In March 2025, the Prudential Regulation Authority (PRA) proposed to raise the deposit protection limit from £85,000 to £110,000. If taken forward, the new limit would apply from 1 December, 2025. The FSCS applies to all UK regulator-approved financial institutions, including building societies and banks.

Is NS&I a good place to keep my money? 

If you’re worried about the stability of other financial institutions then NS&I is a good place to keep your money. But it’s worth keeping in mind that NS&I has a duty to taxpayers to achieve the best possible outcome by keeping costs low for the government. It does not have a duty to offer the best savings deals.

What’s more, due to its position in the market, demand for its products is often high, so it does not need to try too hard to get business by offering high interest rates. While the organisation sometimes issues market-leading rates, it has no obligation to do so.

As such, better rates are often available elsewhere. For example, the highest interest rates NS&I offer on their one-year fixed saving product, the Guaranteed Growth Bond, is 4.18%, lower than the 4.5% offered by the top one year fixed savings account on the market.

What are the best NS&I products? 

NS&I offers a range of products. They’re designed to appeal to a wide range of people and the line-up changes from time to time. It’s worth seeing how these products compare to the rest of the savings market, as a cut to the base rate could push savings rates down. Here are some of the most popular products currently offered by NS&I.

Direct Savers

This works in the same way as other easy-access savings products and can be managed online. NS&I's Direct Saver offers 3.3% AER. If you're on the hunt for the best easy-access savings account, it’s worth checking how the NS&I Direct Saver compares to the rest of the market.

Guaranteed Growth Bonds

This is similar to other fixed-rate bonds sold in 'issues', each with a specific interest rate for the duration of the bond. NS&I’s Guaranteed fixed bonds have recently increased their interest rates.

They now offer 4.18% AER fixed for one year, 3.85% AER, fixed for two years, 3.88% gross/AER, fixed for three years, and 3.84% AER fixed for five years.

Savers can invest between £500 and £1 million per person per issue in these bonds. Interest is paid when the account matures. You might want to check the best fixed rate accounts on the market to see how NS&I’s fixed bonds compare.

For advice on what to do when your British Savings Bond matures, read our separate article.

Guaranteed Income Bonds

The Guaranteed Income Bonds offer up to 4.18% AER when you fix your cash for one year, 3.85% AER, fixed for two years, 3.88% AER fixed for three years, and 3.84% AER when fixed for five years.

In contrast to the Guaranteed Growth Bond, interest is paid monthly, rather than when the account matures.

Index-linked Savings Certificates

These are very limited products, sold in small issues that tend to be snapped up quickly. Each year, the investment's value moves in line with a measure of inflation called the Retail Prices Index (RPI), and they must be held for the full term. If you decide to cash out early, you’ll have to pay a penalty. Currently, Index-linked Savings Certificates are not on sale.

Premium Bonds

One of the most popular products from NS&I are Premium Bonds, which offer the chance to win tax-free cash prizes.

For each £1 invested, you get a chance of winning – for instance, if you save £500, you'll get 500 bonds and 500 chances to win a cash prize.

Cash prizes vary between £25 and £1 million, with two Premium Bonds holders winning the £1 million jackpot each month.

In September’s Premium Bonds prize draw alone 6,026,999 prizes were awarded to savers, with a total prize pot of £397,781,850.

NS&I has launched a prize checker tool so savers can check for Premium Bonds prizes each month.

As you are not necessarily guaranteed to win any prizes in the monthly prize draws, money you invest in Premium Bonds runs the risk of remaining stagnant.

If you leave your savings stagnant for long enough, they could start losing value in real terms as they are eroded by inflation.

The latest prize draw for National Savings and Investments (NS&I) Premium Bond winners was announced at the start of October - and with more prizes now up for grabs, there is a higher chance bond holders may have won a prize. If you hold Premium Bonds, could you be missing out on a prize? 

While the million pound jackpot winners get notified in person via Agent Million, other winners who could have won anything between £25 and £100,000, get a notification in the post or via email.  

But problems arise if NS&I does not have your up-to-date contact information, meaning you may not know if you have won a prize.

We look at how to check and claim your winnings for October and previous months.

How many Premium Bonds prizes are unclaimed?

According to NS&I, over two million premium bond prizes remain unclaimed. The unclaimed  2,307,167 prizes are worth £80,552,900. Around 268,104 prizes of which belong to winners in outer and inner London, worth more than £8 million. 

In the October draw, two lucky premium bond holders won the October NS&I million-pound jackpot, from Greater Manchester and West Scotland. 

But in these winning areas, thousands of prizes are still waiting to be claimed. In Greater Manchester alone there are 48,413 unclaimed prizes worth £1,629,450 - including a £100,000 prize from September 2010. 

In West Scotland, one premium bond holder has won £25,000 in the February 2018 prize draw,  but is still waiting to be claimed. This forms part of the 14,190 unclaimed prizes in West Scotland, worth a total of £432,325. 

The oldest unclaimed prize goes all the way back to June 1961, worth £50. 

How to check if you have unclaimed premium bond prizes 

There are multiple ways to check if you have any unclaimed premium bond prizes waiting for you. 

The easiest option is to go to nsandi.com and use its prize checker, or you can download the official prize checker app (available on Android or iOS). This will show you any winnings you may have over the past six draws and any unclaimed prizes. 

If you use the website, you will need your Premium Bonds holder’s number to hand. If you don’t have this, you can use the app which requires your NS&I number which is 11 digits long. 

You can also call NS&I for free on 08085 007 007 to check for any unclaimed prizes, but you must be registered for online or phone banking with NS&I. 

If you’re not registered, you can write to NS&I to check if you have any unclaimed prizes. You can send your letter to: NS&I, Sunderland SR43 2SB.

You should include the following information in your letter so there are better chances of tracking down your prizes: 

• Premium Bonds holder's number
• Your current name
• Your current address
• Any previous addresses where Bonds may have been registered
• Your signature

Any prizes you claim will be sent to your home address and not to your bank account. 

October 2023 Premium Bond winners 

The latest prize draw (October 2023) saw two lucky jackpot winners taking home £1million. A total of 5,786,217 prizes were won worth £470,853,175. Here are the details of the prize draw.  

HSBC's 5.7% one-year fixed bond rate mentioned in this article is now off the market. See our guide to best savings accounts for the latest offers on cash savings

If you’re looking for the best savings accounts, you may need to hurry to secure a top rate as some banks are starting to pull their best deals. 

We’ve already seen some top deals close, such as NS&I, which withdrew sales of its one-year fixed bond paying 6.2% after just 5 weeks of the bonds being on sale. 

And now, high-street giant HSBC has said it will be pulling its one-year fixed-rate savings account this Wednesday, 18 October. Earlier this month, the bank increased the rate from 5.05% to 5.7%, making it a competitive option for savers. But the special rate was a time-limited offer, and customers will need to act quickly before it disappears this week. 

Banks and building societies, including high-street lenders like HSBC and Lloyds, have been raising their savings rates over the past few months. 

But with the Bank of England rate frozen and predictions that interest rates could fall next year, some of the top accounts are now being withdrawn, while other saving rates are being cut.

For example, NS&I withdrew its market-leading 6.2% one-year savings bonds on 6 October. Almost a quarter of a million savers managed to grab the top rate before the government-backed savings organisation closed the door on the accounts.

Meanwhile, Santander pulled its best-buy 5.2% easy-access account last month - the deal was due to end on 17 September, but actually finished on 12 September.

We look at how the HSBC account works, and how it compares to other savings accounts.

How does the HSBC one-year account work?

The HSBC Fixed Rate Saver is available to those with a minimum deposit of £2,000. The maximum you can save in the account is £1,000,000.

You need to be an HSBC customer to qualify, and have a current account or savings account (excluding regular savings accounts and ISAs) with the bank. 

Interestingly, children can hold the account, as well as adults. Savers aged 7 and over are eligible; those aged between 7 and 15 will need their application signed by a parent or guardian.

The interest rate is fixed for the duration of the account, and is paid either monthly or annually. The increased rate of 5.7% will apply until 11:59pm on Wednesday, 18 October.

Withdrawals are not allowed. However, if you want to access your money before the year is up, and you have less than £50,000 in the account, you can close it early for a fee of 90 days’ interest.

Is a 5.7% interest rate any good?

A 5.7% rate for a one-year savings bond from one of the UK’s biggest high-street banks is a pretty good deal. However, there are plenty of challenger banks offering better rates, with a handful offering above 6%. 

The Ahli United Bank UK 1 Year Fixed Savings Account* pays 6.1%,  via the marketplace savings provider Raisin UK.

*When you sign up via this link, we may earn an affiliate commission from this deal.

Meanwhile, Habib Bank Zurich HBZ Fixed Rate eDeposit pays 6.03%, LHV Bank 1 Year Fixed Term Deposit (via Raisin) pays 6%, and Cynergy Bank 1 Year Fixed Saver has a rate of 5.95%.

Those with a very large amount of money to squirrel away may wish to consider Ford Money’s 1 Year Fixed Saver, paying 5.95%, as you can deposit up to £2 million in this account.

For the best one-year savings accounts on the market right now, check out our handy round-up.

While the HSBC account may not be able to compete with some of the lofty rates on offer from challenger banks, it is arguably still an attractive offer if you’re an HSBC customer and you want to open an account quickly and simply, and manage your savings (and your current account, if applicable) in one place. 

In addition, the HSBC account can be opened and managed either online or in branch, so if you’re someone who prefers to do their banking in-person, this could be a good option for you. If you’re looking for a decent one-year savings account for a child (aged 7 or over), this could also be a contender.

The rates mentioned in this article are no longer available. See our top savings accounts article for the latest offers.

For those looking to make the most of their cash savings, saving into NS&I’s one-year Guaranteed Growth Bonds and Income Bonds made perfect sense with its market-leading 6.2% interest.

Almost a quarter of a million savers bagged the top rate since they launched on 30 August 2023.

NS&I is also popular for products like Premium Bonds, where two people get the chance to win a million pound jackpot each month alongside other prizes.

The 6.2% rate on was the highest rate the bond products have offered since they hit the market in 2008.

But, NS&I’s goal is to essentially help raise money for the government and in the current financial year, its target is £7.5bn. It does this by drawing in savers with attractive offers in return. 

In withdrawing them from general sale, NS&I said it remains on track to meet its net financing target for 2023/22.

NS&I chief executive, Dax Harkins, said: “This summer’s new one-year fixed-rate Bonds have been a great success. I am pleased we were able to keep them on sale for over five weeks, enabling more than 225,000 savers to benefit from the highest interest rates we have ever offered on these products.”

With the bonds no longer on sale, savers will have to look elsewhere to get the best rates on fixed savings accounts.

If you missed out on NS&I 6.2% rate, then here’s where to find the alternatives to make the most of your cash holdings.

 Alternatives to NS&I's 6.2% rate 

If you are happy to lock your cash away for at least a year, then you can still earn more than 6% interest on fixed savings - but you may have to look outside of the high street to get the best rate. 

While it does not beat the 6.2% that was available with NS&I, you can earn 6.12% with Al Rayan Bank, which is available by marketplace savings provider Raisin. You need a minimum of £5,000 to open this account.

The next best is via Beehive Money, providing 6.10% interest. The minimum deposit is £500.

If you do not want to stash your cash away for a year, some easy access accounts now also pay more than 5%. See our article on the best easy access accounts for the latest deals.

With the Bank of England set to continue cutting interest rates, it appears time is now short if you want to secure an inflation-busting savings account. So, how do National Savings & Investments (NS&I) savings rates compare to the rest of the market?

NS&I is a government-backed savings bank. It primarily exists to raise money for the Treasury, but also to provide value for money to taxpayers and savers.

It’s best known best for its Premium Bonds, which offer cash prizes in a monthly draw. While the returns offered by this savings product aren’t guaranteed, NS&I has several accounts and bonds that do provide certainty for your money. For example, British Savings Bonds.

So, with interest rates potentially going down even further in the near-future, how do NS&I’s savings accounts compare to the best savings rates on the market? We’ve crunched the numbers.

NS&I savings: how do its interest rates compare?

To map out how NS&I stacks up compared to the rest of the savings market, MoneyWeek has mapped out the easy-access, ISA and bond products they offer. We’ve also included the current best rates across each category.

Easy-access accounts

NS&I rates:

• Direct saver - 3.75% (variable)
• Income Bonds - 3.75% (variable)

Market-leading rates:

• Cahoot Sunny Day Saver - 5% (variable)
• Atom Bank Instant Saver Reward - 4.85% (variable)
• Principality BS Online Bonus Triple Access - 4.85% (variable)

ISAs

NS&I rates:

• Direct ISA - 3% (variable, also easy-access)
• Junior ISA - 4% (variable)

Market-leading rates for adult cash ISAs:

• Trading 212 Cash ISA - 5.17% (variable)
• Moneybox Cash ISA - 5.17.% (variable)
• Plum Cash ISA - 4.68% (variable, interest drops based on amount saved and number of withdrawals in a year)

Market-leading JISA rates:

• The Stafford Building Society - 4.75% (variable)
• Coventry Building Society - 4.7% (variable)
• The Family Building Society - 4.6% (variable)

Bonds

NS&I rates:

• Two-year British Bonds - 4.1% (fixed)
• Three-year British Bonds - 4% (fixed)
• Five-year British Bonds - 3.9% (fixed)
• Three-year Green Savings Bonds - 2.95% (fixed)

Market-leading two-year rates:

• SmartSave 2 Year Fixed Rate Saver - 4.61%
• Hodge Bank 2 Year Fixed Rate Bond - 4.6%
• Hampshire Trust Bank 2 Year Online Fixed Saver - 4.51%

Market-leading three-year rates:

• JN Bank - 4.6%
• SmartSave - 4.55%
• Oxbury Bank - 4.54

As you can see, NS&I is not offering market-leading rates on any of its savings products. Here’s a rundown of the advantages and disadvantages of saving with the bank.

What are the advantages of NS&I?

There are three big benefits of saving with NS&I. First, its savings accounts often have higher maximum balances than other banks and building societies.

For example, savers can hold up to £2 million in NS&I’s easy-access Direct Saver account. At the moment, this variable rate account offers 3.75% interest on the full amount sitting in this account.

Although this is hardly a market-leading rate, the maximum balance outshines most competitors.

So, if you have a big pot of cash that you want to grow (and, in this instance, don’t mind paying tax on), an NS&I account could be ideal.

The second advantage is that NS&I is backed by the government. This means NS&I cannot go bust and you can guarantee that 100% of your money is safe. Much of the rest of the market is covered by the Financial Services Compensation Scheme (FSCS), which only guarantees compensation of up to £85,000 per person if a bank goes bust. You should always check if a bank is covered by the FSCS before saving your money with them.

Third, if you've maxed out your ISA allowance and are worried about paying tax on your savings interest, NS&I has a unique tax-free savings product - Premium Bonds. If you win, the cash you receive is completely tax-free.

Of course, you need to win to get any sort of return on your money. But whatever you stow away in Premium Bonds is completely shielded from HMRC.

Every other non-ISA savings account in the UK is subject to tax if you exceed your annual allowance LINK. Allowances are particularly small for higher and additional-rate taxpayers, so it’s worth finding out how to avoid the savings tax trap.

 What are the disadvantages of NS&I?

One of the drawbacks with NS&I is that it rarely offers the highest saving rates. The reason for this is that it has to balance the interests of savers, taxpayers and the government. So, you cannot rely on NS&I to be market-leading.

Sarah Coles, head of personal finance at the investment platform Hargreaves Lansdown, says: “For the vast majority of the time, NS&I applies the time-honoured rule that it wants to offer something in the middle of the pack, so it attracts enough cash, but without paying over-the-odds for it.”

Someone choosing NS&I’s Direct ISA, which currently has a rate of 3%, would be sacrificing an extra 2.17% of interest by not picking the top cash ISA on the market (Trading 212, 5.17%).

Very occasionally, NS&I does offer a big-hitting rate. Its 6.2% one-year fixed bond was chart-topping until its withdrawal after just five weeks in late-2023. So, MoneyWeek would advise acting quickly to snap up any market-leading products from NS&I, as they’re unlikely to hang around for long.

Another disadvantage of NS&I for some savers is that it does not have a physical presence on the high street. Additionally, some NS&I accounts are online-only. While bank and building society branches are closing at a rapid rate, most major brands are likely to have at least some sort of presence in your area. And if they don’t, you can often bank with them over the phone or through the post.

The cashback deal via Raisin mentioned in this article has now ended. You can see all the latest rates in our article on the best fixed savings deals.

The online savings marketplace Raisin is offering a 6.1% one-year bond plus £25 cashback*. While it comes second to NS&I’s 6.2% in our list of best savings accounts, we look at how you can beat it with this Raisin cashback deal.

The highest interest rate on a one-year savings account right now is 6.2% via NS&I’s Guaranteed Growth Bond and Guaranteed Income Bond - the one-year fixed bond duo are paying their highest rate since launching in 2008.

So, if you’re happy to lock up your money for 12 months and looking for the best deal, the NS&I bonds look like a sure bet.

But, could Raisin’s 6.1% deal with the £25 cashback* help you beat NS&I?

We crunched the numbers to reveal the point at which you could be better off putting your money in with Raisin and when NS&I could be a better option. 

*When you sign up via this link, we may earn an affiliate commission from this deal.

Is the Raisin deal better than the NS&I bonds?

We analysed what’s on offer to work out whether the Raisin deal is a better option for your money, or whether an NS&I bond would pay you more.

Raisin is an online savings marketplace that gives you access to accounts from more than 30 banks and building societies. You save your cash with the underlying savings provider, but if you have more than one savings account you can see them all in one place with Raisin, and you may get extra benefits.

The 6.1% deal from Raisin is offered by Ahli United Bank (UK). You need to invest a minimum of £10,000 to get the £25 cashback. Saving £10,000 would produce annual interest of £610. Add £25 cashback on top, and you’ve got a total of £635.

In contrast, NS&I’s Guaranteed Growth bond pays a higher interest rate of 6.2%, but with no cashback. On a £10,000 investment, the annual interest comes to £620.

So, on a £10,000 amount, Raisin is the winner, leaving you £15 better off. 

In fact, all the way up to £25,000, Raisin pays a higher sum to savers when you factor in the cashback.

At £25,000, the payout reaches equilibrium. With a rate of 6.1%, the interest on the Raisin bond is worth £1,525. With £25 cashback on top, the total comes to £1,550. Which is the same as the annual interest on the 6.2% NS&I Guaranteed Growth Bond.

If you have less than £25,000, choose Raisin. If you have more, choose NS&I

For sums below £25,000, you will get a bigger payout when you open the 6.1% Ahli United Bank bond on Raisin and claim the cashback.

For sums above £25,000, you’re better off opening the NS&I bond. 

For example, take the maximum amount of £85,000 permitted in the Raisin bond from Ahli United Bank. If you stashed this amount with Raisin, you’d make £5,210 (including the cashback). If you chose to save it with NS&I instead, you’d make £60 more, with interest totalling £5,270.

How to get the Raisin cashback deal - are you eligible? 

Raisin’s cashback offer goes live today, 11 September, and runs until Monday 25 September. The deal is available via our special link*.

You need to save a minimum of £10,000, which can be with the 6.1% Ahli United Bank bond, or any other savings account offered on the Raisin platform (for fixed-rate bonds, the term length must be at least six months). The account must be fully funded with at least £10,000 by 11.59pm on 31 October.

The promo code of OFFER25 must be entered when signing up for a new Raisin UK Account. The cashback offer is only available to new Raisin customers. 

The £25 payment will be made to the Raisin UK Account within 14 days of the savings account being active for six months.

What else do I need to know?

NS&I and Raisin’s one-year bonds have different minimum and maximum saving levels. With the Raisin bond, the minimum amount you can deposit is £1,000 (although you need to save at least £10,000 to qualify for the cashback). With NS&I, it’s £500. 

If you have less than £10,000, choose NS&I

So if you have say £5,000, you would receive £310 interest after a year with NS&I, versus £305 from the 6.1% Raisin bond.

As previously noted, the maximum with the Raisin bond is £85,000, but with NS&I it’s a whopping £1 million. So, if you want to invest, say, £200,000, you’ll need to use NS&I.

Note the savings protection

It’s important to note that money held with Ahli United Bank - and most other savings accounts on the Raisin marketplace - is protected by the Financial Services Compensation Scheme, which covers up to £85,000 of a customer’s money in an account should a bank or building society go bust. 

In contrast, the protection is unlimited with NS&I, as the organisation is backed by the Treasury. 

Consider splitting a large investment and using both bonds

You could split a large amount and take advantage of both deals. So, put £10,000 with Raisin (this is the minimum needed to qualify for the cashback), and the rest with NS&I.

With a £200,000 sum, the maths would look like this:

• Save £200,000 with NS&I = £12,400 annual interest GRAND TOTAL
  
  VERSUS
  
• Save £10,000 with Raisin = £610 annual interest + £25 cashback 
  PLUS Save £190,000 with NS&I = £11,780 annual interest
  = £12,415 GRAND TOTAL

So by using both savings bonds and scooping up the cashback, you could secure a higher amount - in the case of a £200,000 investment, you’d pocket an extra £15.

Note that the savings market is very fast-paced right now, with products launched and pulled every day. So if you’re searching for the best one-year savings account, check the latest deals in our savings round-up to ensure you get the best available deals. 

The NS&I one-year bonds are unlikely to be on sale for long, so if you’re interested, act fast. 

The NS&I rate mentioned in this article is no longer available. Please see our article on the best fixed savings accounts for similar deals for one year fixed savings offers. 

National Savings & Investments (NS&I) made waves in the savings market when it launched a table-topping one-year fixed-rate savings product last month.

The government-backed savings provider - best known for its Premium Bonds product - released new issues of its one-year fixed rate Guaranteed Growth Bonds and Guaranteed Income Bonds with rates of 6.2% AER. This is the highest rate the products have offered since they hit the market in 2008 and also sits at the top of MoneyWeek's best buy table for fixed savings. 

As interest rates have jumped over the past 12 months, NS&I has tried to keep up, hiking rates on most of its products, including Premium Bonds, Green Bonds, direct savings accounts and fixed savers. But it’s struggled to keep up with other savings providers, which have been far more aggressive in passing higher rates onto consumers. 

NS&I’s fixed-rate bonds are now the best offer on the market, but savers shouldn’t sit on their hands if they want to take advantage of these offers.

It’s unlikely they’ll be around for long - we explain why. 

Why NS&I may pull the 6.2% rate

To explain why this offer may not be around for long, it is important to understand how the government-backed savings provider works.

Founded 162 years ago, NS&I’s main goal is to raise money for the government. 

For the past couple of decades, the government has been spending far more every year than it collects in taxes. It has covered the difference by borrowing money.

The UK government generally borrows money by issuing gilts. These are bonds issued and sold to investors around the world, with the process being managed by an arm of the government called the Debt Management Office (DMO). 

At the beginning of every financial year, the Treasury works with the rest of the government departments to try and figure out a financial plan for the year ahead. These calculations allow the Treasury to estimate how much the government will need to borrow. It then works with the DMO to figure out a plan.

This is where NS&I comes into play. The institution is tasked with raising a certain percentage of the overall borrowing total. For the current financial year, its target is set at £7.5bn.

This annual target is only a fraction of the estimated £200bn the government is projecting to borrow in the current financial year. But that doesn’t mean NS&I is a small player. Overall, it manages £215bn (as of March 2023) or around 7% of the government’s outstanding debt. 

As NS&I is essentially another arm of the Treasury, savings are backed 100% by the government. Savings are generally only protected up to £85,000 under the Financial Services Compensation Scheme with other savings providers. 

NS&I is an important source of funding 

NS&I is an important source of funding for the government. Borrowing money from domestic savers gives the Treasury more control, and unlike international investors, domestic savers are less likely to pull their money at the first sign of trouble, which is exactly what happened last year during Liz Truss’s disastrous, short-lived premiership.

NS&I launched its market-beating rate to attract savers. In the increasingly competitive savings market, the institution is struggling to meet its fundraising target for the year. At the last count, it was £400m behind schedule. Therefore, management will be hoping the table-topping offer will help it raise the outstanding amount. 

However, NS&I also has a duty to achieve value for money for taxpayers. That suggests it won’t keep paying over the odds to attract money. And NS&I’s offer is well over the odds. At the time of writing, the government can borrow money for a year in the gilt market for 5.1%.

That’s why NS&I’s 6.2% Growth Bond offer is unlikely to be around for long. The savings provider seems to be using the offer as a last-ditch effort to meet its funding targets. When those are met, to achieve the best offer for taxpayers, it’s likely to pull the product. 

NS&I will reveal this month's Premium Bond winners this morning (1 November). With prizes ranging from £25 to £1m – we explain when you can check to see what you may have won?

National Savings and Investments (NS&I) has handed out 643 million prizes worth £27bn since the first draw in 1957. In September alone, ERNIE handed out  5,782,602 prizes worth £470,559,225. 

Two lucky bondholders become millionaires every month, but thousands of other customers receive prizes from £25. 

We explain how to check if you’ve won this month and whether now is a good time to buy Premium Bonds. 

Did you win in November’s NS&I Premium Bonds draw?

You can check if you won – as well as any prizes on offer on any given month, any winnings you may have had over the past six months, and any unclaimed prizes you might have – on the NS&I app, available on Android or iOS, and the official prize checker page on the NS&I website. 

For the November draw, you can check from 2 November.

You can also set up your Amazon Alexa smart speaker to let you know. Just activate the prize checker skill on the Alexa app and enter your NS&I number. After that, Alexa will keep you up to date. 

How will NS&I prizes be paid to me? 

Prizes will be paid into bank accounts or reinvested into premium bonds, as this is far quicker and safer than waiting for a cheque in the post. 

You can set up automatic payments on the NS&I website. 

Should you buy Premium Bonds?

NS&I has been hiking the rates on its products lately as it tries to keep up with the rates on the best savings accounts.

The savings provider hiked its Premium Bond prize fund rate to a 24-year high in August, meaning the odds of winning will improve from 22,000 to 1 to 21,000 to 1. 

Additionally the minimum investment of £25 makes Premium Bonds an easy way to start saving. 

But it’s worth remembering that you won’t earn any money on your investment. If you’d like to earn a return, NS&I has boosted the rate on its one-year fixed bonds to 6.20%.

It also boosted the rate on its Green Savings Bonds to 5.7%. 

The best savings accounts are offering rates of up to 7% too, so it’s always worth shopping around to make sure you’ve found the best home for your money. 

The NS&I rate mentioned in this article is no longer available. Please see our article on the best fixed savings accounts for similar deals for one year fixed savings. 

National Savings & Investments (NS&I) has boosted the rate on its one-year fixed bonds, making them one of the best savings accounts currently on the market. 

The Premium Bonds provider has released new issues of its one-year fixed rate Guaranteed Growth Bonds and Guaranteed income Bonds – offering savers 6.2% AER, the highest ever rate since these products went on sale in 2008. 

Previously they paid 5%. The boost makes them the most competitive one-year fixed rate savings account on the market. The products are available from today, 30 August. But note, they may not hang around for long - we explain why you need to act fast to bag NS&I's 6.2% rate. 

Savings providers have been boosting their rates as they aim to pass interest rate hikes by the Bank of England (BoE) on to savers. Most have been slow to do so, drawing criticism from the FCA. 

But NS&I’s latest boost is  “brilliant news for savers, who have the chance to snag a top rate with a 100% Treasury guarantee, at around the peak for rates on one-year savings accounts”, says Sarah Coles, head of personal finance at Hargreaves Lansdown. 

The BoE base rate currently sits at 5.25%, its highest level since 2008. Meanwhile the rate of inflation fell to 6.8% in July. While NS&I’s rates are still not inflation beating, they are starting to inch closer. 

NS&I has boosted the rates on a number of its products over the past couple of months as it tries to draw in more cash from savers. It hiked the rate on its Premium Bond prize fund rate to a 24-year high early August, and it boosted the rate on its Green Savings Bonds to 5.7% – but they do have to be willing to lock their money up for three years. 

How to get an NS&I one-year fixed bond

To invest in this product you’ll have to be willing to lock your money up for a year. Savers need a minimum investment of £500, and a maximum of £1,000,000. 

Interest is paid on maturity. Once your bond matures, you’ll have the option to withdraw or reinvest your cash. 

The savings provider is also boosting the rates on its fixed-term savings products, available only to savers with maturing products. You can see the rate increases on this table, supplied by NS&I. 

How do other products compare and can you beat NS&I's top rate? 

NS&I’s latest products offer the best rates available to savers looking for one-year fixed products. 

The savings provider is 100% backed by the Treasury, which is part of its appeal. The FSCS compensation scheme, which most banks are protected by, covers only £85,000 of your money.

But you may be able to beat this rate with this one deal via Raisin which pays 6.1% plus a £25 cash bonus*. We explain how you can beat NS&I's 6.2% rate, details of the cashback deal and who can get the offer. 

Other accounts you may be interested in are:

Investec’s 1 Year Fixed Rate Saver offers a rate of 6%, and you can open the account with £5,000. 

Close Brothers Savings’ 1 Year Fixed Bond also offers 6%, and you need £10,000 to open the account. 

And Kent Reliance’s 1 Year Fixed Bond offers 5.98%. You can open it with £1,000.

 *When you sign up via this link, we may earn an affiliate commission from this deal.

Tickets are now on sale for our annual investment conference, the MoneyWeek Summit on 29.09.2023 in London. Book now at www.moneyweeksummit.com. 

Book before 10pm on 8th September 2023 to benefit from our End Of Summer Offer: MoneyWeek subscribers can book 2 tickets for £399 (normally £499). Not a subscriber? Get £80 off standard tickets using code: DISCOUNT80.

Savers can now get a return of 5.7% if they’re willing to lock their money up for three years with National Savings and Investments (NS&I) thanks to the Bank of England’s (BoE) string of rate hikes.

The state-backed provided has launched a new three-year issue of its Green Savings Bonds with a rate of 5.7%, up from 4.2% offered in February. It was just 0.65% at launch in October 2021.

Dax Harkins, NS&I chief executive, says: 'I'm really pleased that we can offer a new Issue of our Green Savings Bonds at a higher rate from today.

“This is a great opportunity for savers who want to see a guaranteed return on their investment while also making a difference with their savings by helping to make the world greener, cleaner and more sustainable.”

How much can you save in NS&I Green Savings Bonds? 

The minimum investment is £100, with a maximum investment of £100,000.

There is a 30-day cooling-off period if you change your mind, but after that, you won’t be able to access your money until maturity.

Interest is calculated daily and added yearly on the investment’s anniversary date, but paid at the end of term.

You can purchase the bond online at nsandi.

 Is NS&I’s Green Savings Bond right for me? 

“The rate on the bond now is a far cry from the 0.65% at its launch almost two years ago – partly reflecting the steep rise in interest rates in the savings market since then and partly as a result of slow initial take-up of NS&I’s newest product,” says Laura Suter, head of personal finance at AJ Bell.

“Someone who put £5,000 into the bonds at launch will be earning just £32.50 a year in interest, compared to the £285 a year that a new customer will be getting today on the same amount. If they had invested £20,000 that difference in interest jumps to more than £1,000 a year,” she adds.

Despite the boost, the interest rate is still below the market-leading three-year bond of 6.05%

“On £10,000 of savings that means savers are sacrificing around £35 of interest a year to go green. The new interest rate puts the account just ahead of green-focused Gatehouse Bank’s three-year Woodland Saver, which pays 5.5% and plants a tree for every account opened,” Sutter adds.

The money invested in these bonds goes towards funding various projects aimed at promoting a greener and more sustainable future. These projects include initiatives to make the transport sector more environmentally friendly, the adoption of renewable energy sources over fossil fuels, pollution prevention, energy efficiency, protection of natural resources, and adaptation to a changing climate.

The first issue of Green Savings Bonds went on sale on 22 October 2021. Since then more than £915m has been invested in them. It is part of the UK Government Green Financing Framework announced by then Chancellor Rishi Sunak to help drive progress to net zero and fund key green projects across the country.

“Green Bonds haven’t flourished quite the way that the government may have wanted. It’s going to be crossing its fingers that this is the enrichment it needs to get the product to blossom,” says Mark Hicks, head of savings at Hargreaves Lansdown.

“It’s a decent rate, but for those keen to seek out the most competitive deals on the market, it falls short. It’s marginally less competitive than the previous issue – which was 0.25 percentage points lower than the top rate when it was launched. This time it’s very slightly further behind the leader. It means you can do better elsewhere,” he adds.

Also, unlike some NS&I products, these green bonds are not tax-free. NS&I says: “The interest you earn on Green Savings Bonds will count towards your taxable income in the tax year your bond matures.”

 Can you beat NS&I's interest rate?

For those that want a better return outside the green bond space, banks and building societies have been raising their savings rates as the base rate continues to rise.

For instance, Santander has just hiked the interest paid on its Edge Saver account, meaning it now pays 7%. 

The best one-year fixed savings accounts offer rates of up to 4.18%, so they might be a better option if you don’t want to part with your money long-term

MoneyWeek provides a full round-up of all the providers, big and small, that have recently upped their savings rates and how they compare to the rest of the market. 

National Savings & Investments has hiked the prize fund rate on Premium Bonds again, as well as increasing the interest rate on five of its savings accounts.

The prize fund rate will rise from 4% to 4.65% in the September draw, reaching its highest level in 24 years. The government-backed savings organisation will add £66 million to the Premium Bond prize pot.

The odds of winning will improve from 22,000 to 21,000 to 1 - their best level since April 2008.

In comparison, the odds in May last year were only 34,500 to 1.

NS&I has repeatedly boosted the Premium Bond rate to keep up with competition in the savings market as Bank of England rate soars. Last week, the base rate hit 5.25%.

In this month’s Premium Bond draw (August), the prize fund rate rose from 3.7% to 4%. In July, the rate increased from 3.3% to 3.7%.

The upcoming change in the September draw marks the eighth time the Premium Bond prize fund rate has increased in just over a year.

How many premium bond prizes are there?

The change in prize fund rate means the total prize pot will grow by £66 million to reach more than £470 million.

NS&I estimates that there will be 5,785,904 prizes up for grabs from September – an increase of more than 269,000 when compared to August 2023.

While there will still only be two £1 million jackpot winners each month, the number of prizes of other amounts will all rise - bar the £25 smallest prize. The number of £25 prizes will fall from 1.7 million to just over £1 million. 

The number of £100,000 prizes - the second-biggest prize - will rise from 77 to 90 each month. At the other end of the scale, the amount of £50 prizes will increase from 1.9 million to 2.3 million.

Number and value of Premium Bond prizes

How has the premium bond prize fund changed?

NS&I has repeatedly hiked the prize fund rate to keep up with the rising base rate and to compete with savings accounts.

Laura Suter, head of personal finance at the investment platform AJ Bell, comments: “It was inevitable that NS&I would increase rates as rising competition in the savings market means it has fallen out of favour with savers who would prefer guaranteed rates elsewhere. In June, NS&I clocked up its third month of falling inflows and actually saw no net inflows, as any money savers put with the provider was wiped out by withdrawals. 

She adds: “Taking a punt on Premium Bonds was a more attractive gamble when interest rates were rock-bottom. But now savers are giving up returns of 5% on easy-access accounts for the chance they might win big on Ernie, which is a tougher call to make.” 

Source: NS&I

Which NS&I savings accounts are changing?

NS&I is lifting the interest rate on its Income Bond, Direct Saver, Direct ISA, Junior ISA and Investment Account on 18 August.

The interest rate paid to Direct Saver customers will increase from 3.4% to 3.65%, while the interest rate paid to Income Bonds will increase from 3.4% gross (3.45% AER) to 3.59% gross (3.65% AER).

The rate paid on NS&I’s Direct ISA will increase from 2.4% to 3%. Young savers will also benefit, with the Junior ISA rate rising from 3.65% to 4%.

Meanwhile, the rate on the Investment Account will edge up slightly, from 0.85% to 1%.

Suter observes that despite the increases none of the rates are market-beating. She comments: “That means to be using NS&I you’d need to have another motivation other than getting the highest possible return. For some, this will be the higher protection than the Financial Services Compensation Scheme offers or the ability to shelter their savings from tax.”

The rate changes announced today follow rate rises on a number of NS&I’s fixed-rate savings products last month. 

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Premium Bonds are one of the nation’s most popular savings products, with Brits holding billions of pounds in them.

They differ from usual savings products, like easy-access accounts or fixed rate accounts, because they don’t pay a guaranteed interest rate.

Instead, every pound you have saved in Premium Bonds is worth one entry into a monthly prize draw where millions of prizes worth between £25 and £1 million are distributed – although there is no guarantee that you will win anything.

The June 2026 prize draw distributed almost six million prizes to savers, worth a collective £376.6 million.

If you are lucky enough to win one of the two £1 million jackpots, you can expect a visit from Agent Million, an anonymous NS&I employee who travels up and down the country informing people of their newfound wealth.

You can find out if you won a lower-value prize the day after the first working day of the month by using the Premium Bonds prize checker.

How to check for Premium Bonds

NS&I website or app

The easiest way to see if you have won any Premium Bonds prizes is by checking online through NS&I’s prize checker tool, accessible on nsandi.com.

If you use a mobile phone, you can also download NS&I’s official prize checker app, which is available on either Android or iOS.

Both of these methods will show you the prizes on offer that month and any winnings you may have had over the past six draws, as well as any unclaimed prizes.

To find prizes, you will need your Premium Bonds holder’s number to use the website and your NS&I number or holder’s number to check via the prize checker app – it will either have nine or 10 digits, or eight digits followed by a letter.

If you don’t have your Premium Bonds number to hand, don’t worry. You can use your NS&I number on the app to check for prizes – it is 11 digits long and starts with an 11, 21, 31 or 41.

Use your Amazon Alexa

You can also use an Alexa-enabled device to check if you’ve won, as long as you have successfully set it up.

Once given the command, Alexa can tell you whether you have won a prize and how much it's worth, as well as details for any upcoming draws.

To get it set up, you’ll need to activate the NS&I Premium Bonds prize checker skill on your Alexa app and enter your NS&I number. After that, you can use your smart speaker to stay updated on prize winners.

How to check for unclaimed Premium Bonds prizes from years ago

Premium Bonds prizes do not expire, meaning that if you held money in Premium Bonds for a while, you may find that you have won some prizes without realising.

You can find out if you have unclaimed Premium Bonds prizes from years ago waiting for you by using the methods listed above to check for prizes.

But there are some other ways of finding out whether you have any cash waiting to be claimed.

If you’re registered for online or phone services, you can call NS&I for free on 08085 007 007.

If you aren’t registered, you can write to NS&I and ask if you have any unclaimed prizes. To help them track any potential prizes down for you, your letter must include:

• Premium Bonds holder's number
• Your current name
• Any previous names
• Your current address
• Any previous addresses where Bonds may have been registered
• Your signature

Send your letter to: NS&I, Sunderland SR43 2SB.

Any prizes will then be sent to your home address. They cannot be sent directly to your bank account.

How are Premium Bonds prizes paid out?

Your prizes will be paid according to the preference you opted for when you created your account.

For example, those who have opted for automatic payments will get their cash prizes paid into their nominated bank account. Alternatively, you might have set your winnings to be reinvested into Premium Bonds.

NS&I says more than nine in 10 prizes are paid directly into winners’ bank accounts or automatically reinvested into more Premium Bonds.

If you haven’t opted for either, you will receive a cheque – so it’s worth checking your address is updated. You can change your payment method on the NS&I website if you wish.

How many lost Premium Bonds prizes are there?

While NS&I has successfully paid out over 99% of all Premium Bonds prizes to winners since 1957, there are still millions of bonds that remain unclaimed.

As of June 2026, there are 2,796,246 unclaimed Premium Bonds prizes worth £121,903,050.

Unclaimed Premium Bonds will never expire so if you think you might have some, they are well worth tracking down.

It is also worth doing this sooner rather than later as your winnings do not earn an interest rate while left unclaimed, meaning their value will be slowly eroded by inflation.

How to find lost Premium Bonds

You can check for lost Premium Bonds by going to NS&I’s website and finding the ‘Form to track down lost savings’. It will be included on this page: nsandi.com/forms.

Customers can complete the form online or they can download it and print out a physical copy to complete by hand.

If doing the latter, send your completed form to: Tracing service, NS&I, Sunderland SR43 2SB

Once completed, NS&I will be in contact and tell you whether you have any lost Premium Bonds.

Alternatively, you can use mylostaccount.org.uk. This is a free service from UK Finance and the Building Societies Association that helps you track down lost accounts or savings. The service is not only for NS&I products, so it may be worth a visit if you have other lost accounts.

If you’re trying to track down Premium Bonds on behalf of someone else, then make sure you are legally entitled to act on their behalf, for example under a Power of Attorney or as an Executor. NS&I suggests calling them for advice on how to trace someone else’s accounts or investments.

Premium Bonds can be owned by people who live abroad so it is still worth checking whether you have any unclaimed prizes or lost Premium Bonds even if you have left the UK.

If you need more help or guidance, NS&I has a helpful list of contacts who may be able to steer you in the right direction.

You can rest assured that your Premium Bonds are safe with NS&I as the money is 100% backed by the Treasury.

How to avoid losing your Premium Bonds prizes

NS&I notifies Premium Bonds prize winners via their chosen communication method, such as email or text, if they have registered their contact details.

However, prizes can end up unclaimed if someone relocates or changes contact or bank details and forgets to update NS&I with the new details.

NS&I says the best way to avoid prizes going unclaimed is to choose for them to be paid directly into your bank account or automatically reinvested into Premium Bonds.

You can reinvest Premium Bonds up to the £50,000 holding limit, and automatically reinvested prizes are immediately eligible for the next draw.

You can find out if you are a National Savings and Investmentwinner in the August Premium Bonds draw. With prizes ranging from £25 to a £1m jackpot, how much did you win?

The monthly draw from the Treasury-backed NS&I is one of the most popular ways of saving and has handed out a whopping £26.8bn in prizes since the first draw in 1957.

August’s prize draw saw over £404m in prizes handed out through 5,516,739 individual winning numbers, with lucky bondholders finding out this morning whether they’ve won - and just how much they are set to receive.

But the two lucky people who have each won £1 million will likely already know who they are, having received a knock at the door from the elusive Agent Million. 

Have you won in August’s NS&I Premium Bonds draw?

Both the NS&I app and the official prize checker app, available on either Android or iOS, will show you the prizes on offer that month, any winnings you may have had over the past six draws as well as any unclaimed prizes. Just remember to have your Premium Bonds holder’s number to hand.

You can also have your Alexa smart speaker do the hard work for you

To get it set up, you’ll need to activate the NS&I Premium Bonds prize checker skill on your Alexa app and enter your NS&I number. After that, Alexa will be able to keep you up-to-date on all things Premium Bonds and prizes.

How will NS&I prizes be paid to me?

More than nine in ten prizes are now paid automatically into bank accounts or reinvested into premium bonds, according to NS&I. They say it is far quicker and more secure than waiting for a cheque. If you want to set automatic payments up, you can do it on the NS&I website.

Is now a good time to buy Premium Bonds?

If you’re not already a Premium Bondholder, there’s a good reason why now may be a great time to ensure your name is in the hat for next month’s draw.

The August draw saw the prize fund rate increase to 4%, and the odds improve from 24,000 to 1 to 22,000 to 1, meaning that each £1 Bond now has its best chance of winning a prize in almost 15 years. 

The latest draw also saw an extra £30 million added to the prize fund, with 455,390 extra prizes available for Bondholders to win. 

With the minimum investment starting at £25, Premium Bonds can be the first step to starting your own successful savings habit, but they’re also a popular way to start saving on behalf of a child. 

Premium Bonds are one of the nation’s much-loved savings products, but they are becoming less attractive as the odds of winning are set to lengthen and the number of prizes on offer are beginning to dwindle.

Offered by National Savings and Investments (NS&I), the products give savers the hope of winning cash prizes every month, ranging from £25 to a top £1 million prize for two jackpot winners who will receive a visit from ‘Agent Million’.

Premium Bonds prizes are tax-efficient, as any winnings you receive are not taxed by HMRC.

However, the monthly prize draws have become less attractive recently. In August 2025, the prize fund rate fell to just 3.6%, down from 3.8% in July and 4.65% in September 2023. It will drop again in April 2026 to 3.3%.

This reduces the level of prizes available and will mean the total amount of money distributed among Premium Bonds winners in the April draw will fall to around £375 million, down from around £408 million in the February draw.

NS&I will also lengthen the odds of winning from 22,000 to one to 23,000 to one, per £1 Bond number.

The changes are due to recent Bank of England interest rate cuts and rules that mean the Treasury-backed lender can’t overly compete with the wider savings market.

Recent data obtained by AJ Bell found that around 63% of people who have Premium Bonds have never won a single prize from the monthly prize draws, another reason to consider if the product is right for you.

There are also rivals to Premium Bonds that could be more lucrative.

A number of savings providers have launched prize draw products, with one prize draw offering the chance to win up to £250,000. So, how do they work?

How savings prize draws work 

Savings prize draws are easy-access or notice savings accounts, where the money you pay in allows you entry into a prize draw.

Each provider has slightly different eligibility rules, frequency and payout rates for their prize draws. Here are the top Premium Bonds alternatives on offer right now.

Alternatives to Premium Bonds

1. Chip Prize Savings Account – win up to £10,000

The prize pot: Chip is offering an attractive jackpot, with a total of £75,000 up for grabs. The top prize is usually £10,000, but 2,500 additional prizes of £10 are available, and 8,000 prizes of £5 can also be won. Now may be a good time to open an account as the jackpot grand prize for March 2026 has been increased to £250,000. There are also 100 prizes of £1,000, 5,000 £10 prizes and 20,000 £5 prizes available. Chip claims the odds of winning a prize on its account are 3.5 times better than Premium Bonds.

How it works: With Chip’s Prize Savings Account you don’t earn any interest on your deposits, instead the money you deposit counts towards entries in a monthly prize draw. Any prize you win is added to your account.

The number of entries savers get is decided by their average balance over the calendar month. The average balance is calculated by dividing the daily balance by the number of days in the month.

You do not have to pay tax on any prizes you may win.

Eligibility: All savers with the Prize Savings Account are automatically given a number of entries into the prize draw.

2. Family Building Society - win up to £50,000

The prize pot: Family Building Society has a Windfall Bond product that operates a monthly prize draw. New and existing customers can win a jackpot of £50,000 and there are also prizes of £100, £500, £1,000 and £10,000.

How it works: Newly opened Windfall Bonds qualify for the Monthly Free Prize Draw in the second calendar month after the bond has been opened. For example, a Windfall Bond opened in January would be entered into March’s Monthly Free Prize Draw.

The value of prizes to be paid each month is calculated by taking the total value of Windfall Bonds entered into the previous month’s free prize draw, multiplied by 1%/12 (one twelfth of one per cent).

Even if you don’t win a prize, the Windfall Bond pays a rate of 2.75%. Customers can access their money after 35 days’ notice, and you do not need to pay tax on your winnings.

Eligibility: You can open a Windfall Bond online, by post and by visiting Family Building Society’s Epsom branch. Each Windfall Bond requires a £10,000 deposit.

3. Credit Union PrizeSaver - win up to £5,000

The prize pot: The PrizeSaver draw is managed by the Association of British Credit Unions. It is a monthly prize draw with a top prize of £5,000, 10 prizes of £50 and 10 prizes of £20.

How it works: Eligible savers are automatically entered into a monthly draw. Every £1 held in a PrizeSaver account gets you one entry into the monthly prize draw, with up to 200 entries per month.

Eligibility: The draw is open to people saving in PrizeSaver accounts with their local credit union. You can only have one PrizeSaver account.

Note: Not all credit unions in the UK offer a PrizeSaver account. Find out which ones are participating on the PrizeSaver website.

4. TSB ‘Yes Days’ prize draw – win £35,000

The prize pot: TSB is offering two current account holders the chance to win £35,000.

How it works: To be entered into the prize draw, you need an open TSB personal current account and must deposit £2,500 by 2 March 2026 to automatically be entered into the prize draw.

Eligibility: Every £2,500 you deposit before 2 March counts as one entry in the draw and you can make up to 25 entries in total. The funds must originate from outside TSB and you need to be 18 or older to enter. The draw will be made on 3 March 2026.

Two lucky people from Hereford & Worcester and Essex have become millionaires after scooping the top prize in August’s National Savings and Investments (NS&I) Premium Bonds prize draw.

The monthly prize draw offers two top prizes of £1 million. 

The first Bond number drawn by ERNIE - NS&I’s random number generating machine - for August was 522MP682337 and is held by a winner based in Hereford & Worcester. The winner has the maximum holding of £50,000 in Premium Bonds, and purchased their winning Bond just last year in December 2022. They become the eleventh winner in Hereford & Worcester. 

The second Premium Bonds millionaire bought their Bonds just a few months ago and is based in Essex and holds Bond number 535RC655361. The winner has £23,700 in Premium Bonds and purchased their winning Bond in April 2023. This win makes them the 22nd millionaire from Essex.

Winners will get a visit from Agent Million.

But it is not only jackpot winners who have found their luck this month. The August draw saw the prize fund rate increase to 4%, and the odds improve from 24,000 to 1 to 22,000 to 1, meaning that each £1 Bond now has its best chance of winning a prize in almost 15 years.

This month also saw an extra £30 million added to the prize fund, with 455,390 extra prizes available for bondholders to win. 

August 2023 Premium Bond prize winners

A prize fund of more than £404 million will be paid out to winners across the country, with a total of 121,368,267,494 bond numbers eligible for the draw.

Since the first draw in June 1957, ERNIE has drawn 637 million prizes with a total value of £26.8 billion.

Jill Waters, NS&I Retail Director, said: “Congratulations to our two millionaires from Hereford & Worcester and Essex. Both of our winners waited under a year to win the jackpot, with one winning after eight months and the other after just four months. This shows that big prizes can be won at any time, regardless of how long you’ve had your Premium Bonds. We hope each of our millionaires enjoys their winnings.

“The Premium Bonds prize fund rate has now hit 4%, the highest it’s been since 2007, meaning we’ll be paying out over £404 million in prizes this month to lucky winners up and down the country.”

How to check for NS&I Premium Bond prizes

You can see if you won in the July prize draw using the nsandi.com prize checker or the official prize checker app, available on either Android or iOS, although you’ll have to wait until tomorrow for the latest results to come through.

You will need your Premium Bonds holder’s number to use the website and your NS&I number or holder’s number to check via the prize checker app.

You can also use your Alexa-enabled device so check if you’ve won. Alexa will be able to tell you whether you have won a prize and how much it's worth, as well as details for any upcoming draws.

It can also tell you if you have any prizes yet to be redeemed, such as a £25 prize from July 1968, which remains unclaimed.

To get it set up, you’ll need to activate the NS&I Premium Bonds prize checker skill on your Alexa app and enter your NS&I number. After that, you will be able to use your smart speaker to stay updated on all things Premium Bonds.

Doing this will also show you if you have any unclaimed prizes. In Hereford & Worcester, home of August’s winning bond holder there are 19,033 unclaimed prizes worth £668,775. 

The largest unclaimed prize is worth £100,000 and this was from the August 2014 prize draw. The oldest unclaimed prize in Hereford & Worcester is from the August 1965 prize draw, and is worth £25.

Likewise in Essex, there are 50,596 unclaimed prizes with a total value of £1,530,625. The largest unclaimed prize is £10,000. There are two of these in total and they were won in the December 2007 and March 2016 prize draws. The oldest unclaimed prize in Essex is from February 1964 and is worth £25.

For more information on how to track down any unclaimed prizes, visit the NS&I website. 

Premium Bonds are one of the country’s most popular savings products, with more than £135 billion saved in them.

Premium Bonds differ from traditional savings accounts as bondholders are not guaranteed interest payments. Instead, Premium Bonds are entered into a prize draw every month.

Savers can win between £25 and £1 million in this monthly prize draw.

In June’s prize draw, more than £376 million was distributed through almost six million Premium Bonds prizes.

Savers can use NS&I’s prize checker tool from the day after the first working day of the month to check if they have won anything in the prize draw.

How do Premium Bonds work?

NS&I’s Premium Bonds are a savings product backed by the UK government. Their unique appeal is that instead of paying a set interest rate you are rewarded for saving by being entered into a monthly prize draw.

With Premium Bonds you are not guaranteed returns, but any winnings you do get are tax-free.

The tax-free aspect is something that may appeal to savers who have used all their ISA allowance but are still looking for ways to shield their savings from the taxman.

For each £1 you invest in Premium Bonds, you receive a unique number which represents one chance to win a prize. Every single bond has a one in 23,000 chance of winning (this will change to one in 22,000 from July). This means the more bonds you hold, the more likely you are to win a prize.

One of the most appealing aspects of Premium Bonds is the security they offer. As the UK government backs them, the amount you have invested in NS&I is always safe.

How much can you hold in Premium Bonds?

The maximum you can hold in Premium Bonds is £50,000. The minimum is £25. You can buy Premium Bonds through the NS&I website, over the phone or by post.

To apply over the phone, call NS&I for free on 08085 007 007.

To apply by post, print and complete an application form and return it with a cheque payable to NS&I. Further instructions and the application form can be found on the NS&I website.

It is also possible to buy Premium Bonds as a gift for a child. The parent or guardian named on their application looks after the child’s bonds until their 16th birthday, regardless of who bought them.

How much can you get from Premium Bonds?

There is no guaranteed return or regular income with Premium Bonds. Instead, you are entered into a monthly prize draw where you could potentially win between £25 and £1 million.

You may have heard of the prize fund rate. This benchmark is used by NS&I to set how many prizes should be given away every month. The figure represents the rate of return for a bondholder with average luck.

Some people will get more, especially if they scoop a big prize, while others will win nothing. The prize fund rate shouldn’t be confused with a conventional interest rate that you would see on a typical savings account.

The prize fund rate is currently 3.3%, and will rise to 3.8% from the July draw.

As well as the prize fund rate, NS&I also publishes the odds of winning. The odds are currently 23,000 to 1 for every £1 bond. This will change to 22,000 to 1 from the July draw.

Are Premium Bonds right for you?

Swapping a guaranteed interest rate for the chance of winning a prize might not appeal to everyone, but Premium Bonds can act as a useful diversifier within a wider portfolio.

Every penny spent on Premium Bonds is backed by the government. For this reason, many investors put considerable amounts into NS&I products.

The tax-free status of the prizes is also appealing for any savers worried about busting their personal savings allowance and having to pay tax on their interest. This is particularly the case for higher-rate and additional-rate taxpayers with large amounts of cash savings.

However, recent data has shown that 62% of people who have Premium Bonds have never won a single prize in the monthly draw, raising questions about whether they are the best place for savers to put their cash.

The research from investment firm Vanguard found that of the 23 million people holding a total of £135.7 billion in Premium Bonds, around 14.3 million have never won a prize.

The asset manager attributed this to 15.1 million having between just £1 and £100 saved, where the probability of winning is extremely low.

To put it simply, if you like the idea of winning big but are also comfortable with winning nothing at all, then Premium Bonds could be right for you. Alternatively, if you want a guaranteed level of interest and the certainty that your savings will stay ahead of inflation, then it’s probably best to avoid them.

How are Premium Bonds prizes drawn?

NS&I has its own random number generator that draws prizes, named ERNIE.

This stands for Electronic Random Number Indicator Equipment and the machine has generated the numbers used in draws since 1957. ERNIE is currently on its fifth iteration.

ERNIE 5 is powered by quantum technology, which uses light to run the sums far quicker than a conventional computer. It takes 12 minutes for ERNIE to generate the random numbers for a prize draw.

The prize draw is entirely random with each £1 bond having an equal chance of winning a prize each month.

A spokesperson for NS&I told MoneyWeek that, in order to maintain a fair outcome, the Government Actuary's Department carries out an independent check each month to ensure that the Premium Bonds prize draw is fully random.

How to find if you have won a Premium Bonds prize

Once winners are chosen, the lucky bondholders are notified through a variety of channels.

Jackpot winners usually find out after being paid a visit by NS&I’s Agent Million, and winners of the smaller prizes can usually check the day after the first working day of the month.

Two of the easiest ways to check for Premium Bond prizes are the online NS&I prize checker and the official prize checker app, available on either Android or iOS.

Who is Agent Million?

If you are a £1 million winner, you will get a knock on the door from Agent Million. The elusive millionaire maker is actually one of a number of anonymous NS&I employees whose job is to track down the lucky winners who have scooped the top prize.

Winning that kind of money can be life-changing, and Agent Million is there to ensure the winner has all the information they need to manage their newfound wealth carefully in the days and weeks after the win.

A new top dog has emerged in the easy access savings space.

As savers look to stem the impact of inflation on cash holdings, Coventry Building Society has launched a new easy access account offering a market-beating rate of 4.50%.

The average easy-access rate is 2.58%, according to Moneyfacts.

The new offering from the lender tops our list of best easy access savings accounts. It’s even better than some of the one-year fixes on offer from high street lenders. 

Easy access savings

Coventry Building Society’s Four Access Saver is available to both new and existing savers and can be opened online with only £1. You can deposit up to £250,000 but it is worth remembering that only £85,000 is protected under the Financial Services Compensation Scheme (FSCS) - perhaps take a look at National Savings and Investments (NS&I)’s Premium Bonds if you’ve got more to invest and are concerned about the safety of your money. 

But the account isn’t as easy to access as some other accounts. As the name suggests, you can only access the account four times within 12 months. Withdrawals beyond this limit are subject to a charge equal to 50 days' interest. 

Daniel McDonald, senior savings product manager at Coventry Building Society, said: “We're expecting our new Four Access Saver account to be popular with savers looking to take advantage of a market-leading rate while still having access to their money if they need to.”

“The account is ideal for those looking for a place to save their rainy-day fund or are saving up for something specific, but don't want to lock their money away and are able to withdraw their savings up to four times a year without charge.”

Can you beat inflation?

Savers have been up against it in trying to beat inflation. Despite rising rates and the new offering from Coventry Building Society, no provider currently offers an easy access account that beats inflation. 

But you can now earn 6.1% on one-year fixed savings accounts – the best rate seen in 14 years, while a two-year fixed savings account can net you 6.15%.

But could you be putting your cash to better use? Amid high inflation, investing your money could help you generate real returns. According to the Barclays Equity Gilt Study, UK shares have beaten cash in 90% of five-year periods since 1899.

So, if you’re happy to take some risk with your money you can invest it. But if you’re wanting to have some more control over your money while somewhat hedging against inflation, then a leading easy access account could fit the bill.

National Savings & Investments (NS&I) has boosted rates across a number of its fixed-term products.

The firm behind the ever-popular Premium Bonds is upping the rate it offers amid increasing competition within the savings space, with the best savings accounts now offering one-year fixed rate deals of more than 6%.

The interest rates paid on NS&I’s fixed-term Guaranteed Growth Bonds and Guaranteed Income Bonds are increasing to 5.00% for new customers, up from the existing 4.00% and 3.90% respectively.

The rate NS&I offers on its two-year and three-year Guaranteed Growth Bonds and Guaranteed Income Bonds, which are not currently on general sale but are available to existing customers when they reach the end of their current fixed term, will also be upped to 5.10%.

Customers who already have one of the two bonds will continue on their original fixed rate. However, at the end of the term, they will be able to roll their savings over into a new product at the rate on offer at that time.

The changes to NS&I’s fixed-term products come two weeks after it announced interest rate increases on a number of its variable products. These are also effective from today. NS&I customers holding Direct Saver and Income Bonds will see the return on their savings boosted to 3.40% from 2.85%.

NS&I chief executive Dax Harkins, says: “Guaranteed Growth Bonds and Guaranteed Income Bonds are popular with our customers and I’m pleased that we’re able to announce these changes today for new and existing customers to take advantage of.”

“Customers holding Direct Saver and Income Bonds will also see a boost from today, with their interest rates going up, and millions of Premium Bonds holders will also have a better chance of winning a prize from the next draw.”

“The changes announced today ensure that NS&I’s products remain attractive to customers and that it continues to balance the interests of savers, taxpayers and the broader financial services sector,” he adds.

Are Premium Bonds the way to go?

NS&I is perhaps best known for its Premium Bonds and the government-backed institution recently upped the number of prizes available, with an extra £39 million in prizes up for grabs.

The odds of each £1 Premium Bond winning a prize will remain at 24,000 to 1, with more chances each month for customers to win prizes worth between £50 and £100,000.

Myron Jobson, senior personal finance analyst at the investment platform Interactive Investor, notes: “Premium Bonds can be fun lottery-style alternatives to an easy-access savings account and might tempt some savers hoping for good luck to bolster their wealth amid the cost of living crisis.”

“But the fact remains that while some savers might be lucky enough to hit the jackpot or win big early on, others may save and wait for long periods for even a small return. It still pays to shop around for the best deal.”

Are savers getting a fair deal?

Broadly, savings rates have steadily trended upward this year, following repeated rate rises by the Bank of England (BoE).

And after years of rock-bottom interest rates, savers finally have access to more generous returns on their cash, although the best deals don’t hang around for long. 

There are also signs banks could be leaning towards passing more of the BoE’s rate increases on to savers. After the Financial Conduct Authority (FCA) summoned some of the country’s biggest banks to ask why rate rises weren’t passed on to savers, lenders have been quick to respond with higher rates on savings accounts. 

The regulator said: “We have started to see some positive action by banks and building societies to improve their rates, and to ensure their customers are benefiting from better value products. We now want to see that progress accelerate.”

But while waiting on the big banks to play catch-up, you could be missing out on hundreds of pounds in interest. 

While National Savings & Investments (NS&I) does not pay an interest rate like savings accounts do, the rate determines the number of prizes that get dished out each month. 

And this month, National Savings & Investments (NS&I) is raising its Premium Bond prize fund rate from 3.7% to 4%, taking the chances of winning a prize to a 15-year high. The increase comes hot off the heels of a rate rise just last month  from 3.3% to 3.7%.

The rate rise means that from August, the odds are improving to 22,000 from 24,000 to one. Each £1 bond will have its highest chance of winning in nearly 15 years. 

This is the seventh time the Premium Bond prize fund rate has increased in over a year as the Treasury-backed savings vehicle competes with rising rates on savings accounts, which have been climbing as the Bank of England hikes interest rates.  

How many NS&I prizes are there?

NS&I said it estimates the changes will see an extra £30m added to the prize fund from August, and there will be 460,000 extra prizes. 

The estimated number of £1m prizes will remain at two, but there will be an estimated 77 £100,000 prizes in August, from 71 in July. 

The number of £50,000 prizes will also jump to 154 from 141 in July. 

Should you buy Premium Bonds?

Premium Bonds are popular savings products, but it’s worth noting the 4% rate does not mean that that’s the return you get on your investment. 

With a savings rate, you’re guaranteed that interest on your cash. The prize fund rate represents how likely someone with average luck is to win a prize. 

The rates on savings accounts are heating up again following the Bank of England’s latest base rate hike. 

The best easy access savings account, from RCI Bank, currently offers 4.2% – and that is a guaranteed return on your money. 

And if you’re ready to lock your money up for twelve months, the best one-year fixed savings account, from My Community Bank, offers 6.03%. 

National Savings & Investments (NS&I) is hiking the Premium Bond prize fund rate from 3.3% to 3.7% in the July draw, its highest rate in 15 years.

This means there will be an extra £39 million in prizes available for bondholders.

The odds of each £1 Premium Bond winning a prize will remain at 24,000 to 1, with more chances each month for customers to win prizes worth between £50 and £100,000. 

It marks the sixth prize fund rate increase for Premium Bonds in just over a year, as NS&I tries to lure savers and compete with rising interest rates on savings accounts. NS&I says the changes are part of its strategy to “balance the interests of savers, taxpayers and the broader financial services sector”.

The last increase to the prize fund rate was in the March draw, when it rose from 3.15% to 3.3%.

NS&I has also announced that it is increasing the interest rate for young savers holding its Junior ISA, with the rate increasing from 3.4% to 3.65% today.

“With the Premium Bond changes, we’re expecting to pay out more than £374 million to winners in July with more higher-value prizes, meaning that, each month, more lives will be changed by Premium Bonds,” says Dax Harkins, NS&I chief executive. 

“This is the second interest rate increase for Junior ISA this year, giving a boost to over 89,000 young savers as we continue to help inspire a stronger savings culture.”

How many prizes are in each draw?

While the number of prizes worth between £50 and £100,000 will go up in July, the number of £25 prizes in the draw will fall. And the pair of £1m jackpots up for grabs each month remains unchanged.

Overall, the total number of prizes will slightly fall, but the value of all the prizes will rise by more than £39 million.

This is the estimated number of prizes we can expect to see next month (compared to this month).

  Number and value of Premium Bond prizes 

 Are Premium Bonds worth it? 

Despite the increase to the prize fund rate, it’s worth noting that a 3.7% rate is not necessarily the best on the market when compared to the top savings rates.

Easy-access savings rates have hit 4% for the first time since 2009, and the best one, two, three and five-year fixed bonds all offer 5.3% or more. 

And with the Bank of England expected to increase interest rates again on Thursday (base rate is currently 4.5%), higher rates from banks and building societies may well be on the horizon.

It’s also important to note that a prize fund rate is not the same as a savings rate. With the latter, the saver is guaranteed to earn that interest rate on their cash. But a Premium Bond prize fund rate is an average rate for someone with average luck. 

In reality, some customers will earn less (some may not even win a single prize, especially if they only hold a small amount in bonds), while others will win more.

Myron Jobson, senior personal finance analyst at the investment platform Interactive Investor, notes: “Premium Bonds can be fun lottery-style alternatives to an easy-access savings account and might tempt some savers hoping for good luck to bolster their wealth amid the cost of living crisis. 

“But the fact remains that while some savers might be lucky enough to hit the jackpot or win big early on, others may save and wait for long periods for even a small return. It still pays to shop around for the best deal.”

Millions of savers win cash prizes in NS&I’s Premium Bonds prize draw each month, with more than £376 million up for grabs in the most recent draw alone.

Most winners will get the lowest and most common prize available of £25 – more than 2.8 million bond holders won this amount in June’s prize draw.

However, millions more higher-value prizes are available too. In June, there were around 3 million £50 and £100 prizes, over 45,000 £500 prizes, and 17,706 prizes of £1,000 and above.

Most winners can check if they won a prize in the most recent prize draw from 2 June, via the NS&I prize checker. But the two £1 million jackpot winners find out slightly earlier.

Jackpot winners should receive a visit from Agent Million, an anonymous NS&I employee who travels up and down the country to tell winners of their newfound wealth.

Their identity is hidden to protect the privacy of winners, as unexpectedly receiving £1 million is likely to change their lives.

While you may already know how Premium Bonds work, we lift the lid on some frequently asked questions about how Premium Bonds winners are notified of their prizes.

How are Premium Bonds prize winners notified?

MoneyWeek: Do all winners get an email saying 'you've just won!', regardless of whether it's £25 or £100,000?

NS&I: Customers who are signed up to be notified of any prize wins via email are notified in this way, regardless of the amount. Any email that Premium Bonds customers receive notifying them of a win does not include the value of the prize. The email notification encourages them to check how much they have won via the prize checker app, online prize checker or on an Alexa-enabled device.

MoneyWeek: What happens with customers who have won a high-value NS&I prize?

NS&I: Customers winning prizes worth between £10,000 and £100,000 are sent a prize claim form in the post. This asks them how they would like their prize paid. For example, they can choose to have their prize paid directly into their bank account or automatically reinvested into more Premium Bonds.

MoneyWeek: How do winners get told when they’ve won the £1 million jackpot?

NS&I: These customers receive a visit from “Agent Million”. This person is an NS&I employee who travels the country to give our lucky jackpot winners the good news. We actually have five Agent Millions. In total, since 1994, there have been around 20 Agent Millions.

MoneyWeek: Who is Agent Million?

NS&I: We keep their identities secret – this is important for the privacy of both our Agent Millions and our winners. Winning £1 million is life changing, so when Agent Million informs the winners, secrecy ensures that sharing this news is a choice for them.

Our Agent Millions are based in Lytham St Annes (in Lancashire), the home of Premium Bonds, so they do have to travel as well as spend the odd night away from home. Although they are sworn to secrecy about the role they perform, they may tell certain family members or loved ones about it for practical reasons. However, they must keep their role secret from friends and colleagues who do not need to know.

MoneyWeek: Do they always visit the winners in person?

NS&I: Our Agent Millions always visit £1 million Premium Bonds jackpot winners in person.

Throughout the pandemic, Agent Million was unable to visit jackpot winners in person for the safety of all involved but has been back on the road since the May 2022 prize draw.

MoneyWeek: What happens if I win £1 million but I'm away on holiday?

NS&I: If a £1 million winner was on holiday when Agent Million visited, they would make contact with the winner via an alternative method.

MoneyWeek: How do you work out which Agent Million contacts the winners each month?

NS&I: All of our Agent Millions perform other roles within NS&I, so which ones are visiting jackpot winners depends on availability. There are, of course, two £1 million winners each month, so two Agent Millions are always in action for each prize draw.

Having five Agent Millions ensures that each month an experienced colleague is on hand to guide our two jackpot winners through a life-changing time.

MoneyWeek: Does the jackpot winner have to prove their identity?

NS&I: For the security of both Agent Million and our jackpot winners, we cannot provide any further information on the process that Agent Million goes through with winners. However, we do ensure that we are paying the prize money to the correct person.

MoneyWeek: What options does the £1 million winner have in terms of how the money is paid to them?

NS&I: The £1 million Premium Bonds jackpot winners can choose to have their prize paid into an NS&I Direct Saver or an account of their choice.

All funds held with us are secure as we are backed by HM Treasury, so if customers choose our Direct Saver account while deciding what to do with their winnings, they have this added peace of mind.

MoneyWeek: Do you help winners who want financial advice?

NS&I: Since April 2022, we have offered £1 million Premium Bonds jackpot winners the option to seek financial advice from any certified financial planner or chartered financial planner in the UK. This means that more than 8,000 advisers have the chance to help winners of the Premium Bonds jackpot. Previously financial advisers came through one firm.

Aside from this, our prize draw team at NS&I keeps in touch with jackpot winners and always recommends they take up our offer to access professional financial advice.

MoneyWeek: What's the average Premium Bonds holding for a jackpot winner?

NS&I: The average holding for a £1 million jackpot winner is £24,649 (based on figures calculated in May 2025). Since the jackpot launched in 1994, there have been more than 500 Premium Bonds millionaires.

In terms of winners who had smaller Premium Bonds holdings, someone from the London borough of Newham won £1 million in July 2004 with a Premium Bonds holding worth £17. The winning bond was purchased in February 1959, so they did have to wait more than 45 years for the win.

To see if you’ve won a prize with your Premium Bonds, enter your details into NS&I's Premium Bonds Prize Checker.

The government-backed National Savings & Investments (NS&I) has bumped up the interest rates on its cash ISA following last week’s base rate increase to 4.5%.

NS&I Direct ISA customers can now earn 2.4% on its cash ISA account - up from 2.15%.

While the increase will be welcomed by customers, NS&I’s ISA rate is still lagging behind its rivals - see our article on the best cash ISA rates to see what other providers are giving.

NS&I says the change brings its Direct ISA in line with other easy-access ISAs available on the market, thought it's not necessarily the best.

“The change made to NS&I’s Direct ISA will ensure that the product is priced appropriately when compared to the rest of the ISA market. It will also help ensure that NS&I continues to balance the interests of savers, taxpayers and the broader financial services sector,” the savings outfit notes.

The NS&I ISA rate was last upped in February alongside a number of other NS&I products, including Income Bonds and the prize rate on its popular Premium Bonds.

Is the easy access NS&I direct ISA a good deal?

If you like the security that come with NS&I - which is that it guarantees to protect any money saved in its products as it is backed by the Treasury - then NS&I is certainly a good choice.

But, if you are simply looking to get the best return in your cash ISA, then you can do better than NS&I, depending on your requirements.

For example, you can currently earn 3.5% with Cynergy Bank’s easy access ISA, which like NS&I, can also be opened with just £1.

And Shawbrook Bank’s easy access lets you earn 3.45% - but you will need £1,000 minimum to open the account. You can find all the latest ISA rates in our article on the best cash ISAs.

And although other banks offer protection from the Financial Services Compensation Scheme for up to £85,000 of your savings, they do not come with the unlimited guarantees that NS&I does.

Sarah Coles, head of personal finance at Hargreaves Lansdown says the product is “trailing well behind the market,” although it is “well ahead of the high street giants”.

However, the headline rate of 2.4% is “nothing to get excited about,” she notes.

“It’s not only lagging the most competitive deals by a significant margin, it’s also well behind the 2.85% on offer on its other easy access products.”

Coles says the upped rates on the ISA may appeal to those with “significant savings” beyond the £85,000 guaranteed by the FSCS.

“However, for those holding less than £85,000 with any one savings institution, there’s the FSCS to protect them, so the gap between this rate and the rest of the market may be big enough to make them think twice,” she says.

Why do savers like NS&I?

NS&I is not renowned for its sky-high rates, rather it attracts customers with its promise to guarantee your money. Not only that, but its millionaire-making Premium Bonds are hugely popular, with savers drawn to the security offered in parallel to the chance to win a life-changing amount of money.

In February, £2bn was deposited with the government-owned savings bank after the collapse of Silicon Valley Bank rattled the nerves of investors across the globe.

Every month Premium Bond holders are entered into a draw where they can win prizes ranging from £25 to £1m. This month, two savers were made millionaires by the Premium Bond draw.

One lucky bond holder has won a grand total of 288 prizes, including the lucrative million-pound top prize. On top of the £1m reward, they have also won one £10,000 prize, one £1,000 prize, eight £100 prizes, 45 £50 prizes and 232 prizes worth £25.

Recently, NS&I has been upping rates across the board while introducing new products. In February it increased the Premium Bonds prize fund rate from 3.15% to 3.30% and brought its Guaranteed Growth Bonds (4%) and Guaranteed Income Bonds (3.9%) back on sale with higher rates.

The same month, NS&I launched a fourth Issue of its Green Savings Bonds account at a fixed rate of 4.20% gross/AER over a three-year term.

The luckiest Premium Bond holder has won over £1m across nearly 300 prizes, a Freedom of Information request has shown.

Every month Premium Bond holders are entered into a draw where they can win prizes ranging from £25 to £1m.

This lucky bond holder has won a total of £1,019,850 across 288 prizes and purchased their first bond in May 2002, the Daily Mail revealed.

The winner has taken home the top £1m prize, as well as one £10,000 prize, one £1,000 prize, eight £100 prizes, 45 £50 prizes and 232 prizes worth £25.

Another bondholder holds the record for more wins, scoring 408 prizes. But they have only taken home £14,325 as their prizes were mostly made up of £25 wiNS.

Indeed, they’ve taken home 315 prizes worth £25, 18 prizes worth £100, 75 prizes worth £50 and two £500 prizes.

Are Premium Bonds worth it?

Premium Bonds are an extremely popular savings product – but they don’t necessarily offer the best rates.

To attract more savers NS&I has hiked its Premium Bond prize fund rate five times in one year, taking it to 3.3%.

That means there’s an extra £15m in prizes to be won each month, increasing the number of prizes worth £50 to £100,000.

NS&I also recently brought back its one-year fixed bonds and boosted the rates on its products to their highest levels in a decade.

What’s more, the government-backed bank could boost its rates further in the coming months after Jeremy Hunt set a new, higher fundraising target for NS&I in his Spring Budget.

But currently, there are better rates on offer. The best savings accounts offer returns of up to 7%.

Meanwhile, the best one-year fixed bonds offer interest rates of over 4% and easy access accounts are paying over 5%.

Providers have gotten more competitive as the Bank of England hikes rates. But savers looking to secure the best deals will have to act fast, as the best deals don’t stick around for long.

Two Premium Bonds holders from Somerset and Croydon have bagged this month’s National Savings & Investments draw, each winning £1 million.

The first Bond number drawn was 236TZ340702 and is held by a winner based in Somerset.

The winner holds £50,000 in Premium Bonds and purchased their winning bond in December 2014.

April’s second Premium Bonds millionaire is based in Croydon and holds Bond number 503VL397852. The winner has £25,000 in Premium Bonds and purchased their winning bond in June 2022.

Earlier this year, NS&I increased its premium bond fund rate to 3.3%, meaning more prizes; this month a total of 5,018,744 prizes will be issued after April’s prize draw, worth a combined £331,237,050.

Here are the details of April’s winners and how to check if you won.

April Premium Bonds prize winners

There were 120,449,834,442 bond numbers eligible for the draw. Since the first draw in June 1957, 616 million prizes have been won with a total value of £25.3 billion.

How to see if you’re a Premium Bond prize winner

Premium Bonds holders can check to see if they have won a prize in April’s prize draw by using the nsandi.com prize checker, the official prize checker app or your Alexa-enabled device from Tuesday 4 April 2023.

You will need your Premium Bonds holder’s number to use the website and your NS&I number or holder’s number to check via the prize checker app.

At the same time, you can check for any unclaimed prizes owed to them. The oldest unclaimed prize is from July 1968, worth £25.

Where to save your money this April

Premium Bonds are one of the nation's most popular savings products. They are the perfect way to start a savings habit, with the minimum investment starting at £25.

And with prize rates rising, they are proving to be a popular product.

For the March draw, the rate rose from 3.15% to 3.3%, creating an extra £15 million in prizes to be won each month.

Premium Bonds customers can add to their Premium Bonds holding quickly and securely, both for themselves or their child, via bank transfer or online.

But those looking for a more reliable return may want to look at some of the rates being offered on savings accounts by banks such as First Direct and Market Harborough Building Society..

The best one-year fixed savings and easy-access savings accounts also have competitive rates. But keep an eye out for changing base interest rates. Recent turbulence within the banking sector has raised questions over whether the Bank of England will hike rates again - a factor central to the savings rates offered by banks.

The collapse of Silicon Valley Bank and Credit Suisse in the US has undoubtedly sent shockwaves across the globe, but for both savers and investors, it has left many nerves rattling, with questions being asked over whether money is safe with a bank. With more savers switching to the safety of NS&I, we look at whether now is a good time to switch to government-backed National Savings & Investments (NS&I).

NS&I has attracted £2bn in February alone, according to Bank of England data.

In December 2022, £700m was deposited, while a month prior, £300m was withdrawn from accounts.

While UK savers and investors benefit from a layer of protection from the Financial Services Compensation Scheme (FSCS) - which covers you for up to £85,000 should a bank or building society go bust - with NS&I, your cash is guaranteed by the Treasury to be safe no matter how much you hold.

And with an increase in interest rates across NS&I savings accounts, savers are increasingly looking to stash their cash there for higher returns and added security.

It is highly expected that NS&I may increase rates further to help boost funding - this is looking more likely as the Bank of England put up its Base rate this month to 4.25%.

If NS&I rates do go up, it is likely that more will turn to it as market volatility in the banking continues, which has already seen some investors readjust their portfolios according to investment platform Interactive investor.

Should you save with NS&I?

If you have more than £85,000 saved in cash, which you may have if you are saving for a house deposit maybe, then it makes good sense to put it into a NS&I account as you get a higher level of protection.

If you are worried about your bank not being safe, then it is worth noting that banks are covered for up to £85,000 of your cash via the FSCS. You can see if your bank is covered at FSCS.

What rates does NS&I offer?

NS&I has been upping rates for its products, including the premium bond prize fund rate from 3.15% to 3.3%, meaning there will be an extra £15m in prizes up for grabs each month.

We have the details of the March premium bond winners in our article - March premium bond winners revealed.

It marks the fifth rate increase for premium bonds in the last year alone.

In February, NS&I bumped up the interest rate on its green savings bond - up from 3% to 4.2%. It is available on a three-year fixed term.

This year also saw the relaunch of NS&I’s one-year fixed bonds, offering rates up to 4%, pitching the bonds as a competitor to some of the best one-year fixed savings accounts.

Meanwhile, its direct saver account offers a 2.85% variable rate, while its direct Isa offers 2.15%.

The junior Isa currently offers 3.4%.

Bank, building society or NS&I?

It’s not only NS&I that’s been attracting positive inflows. Banks, building societies and NS&I reported a combined net flow of £3.6bn into customer accounts – £300m more than in January.

And while NS&I may look look attractive, you may find better interest rates elsewhere - conventional banks may be incentivised to continue putting up rates to persuade savers to keep their cash in place.

Samuel Tombs, Pantheon Macroeconomics chief UK economist, said: “Households will be further disincentivised from spending their savings if, as we expect, banks raise deposit rates in order to ensure that depositors who have funds over the £85,000 guaranteed by the Financial Services Compensation Scheme do not withdraw their money.”

But savers are “continuing to vote with their feet” and shift their money to better-paying accounts, says Laura Suter, head of personal finance at AJ Bell.

“Fixed-rate accounts continued to be popular, as people lock in higher rates, with £6.8bn of money deposited in these accounts. February was the fifth consecutive month where people moved their money out of easy-access accounts and into fixed-rate ones.

“As many signal that we’re nearing peak interest rates it’s a good time for savers to snap up higher rates now, before the market plateaus when the Bank of England ends its rate-hiking cycle,” she said.

Interest rates on the best savings accounts have been rising as providers pass the Bank of England’s (BoE) base rate hikes on to consumers, but it seems National Savings & Investments (NS&I) is failing to keep up. 

The latest figures from the Bank of England show this has put savers off the Treasury-backed savings provider. “With interest rates rising across most other savings providers, NS&I is struggling to keep up and attract enough assets,” says Laura Suter, head of personal finance at AJ Bell. 

“Any money [NS&I products]  did draw in was wiped out by flows going out, meaning no net inflows,” adds Suter. “This is a drop from the £800 million of inflows they saw in May and is the third month of falling inflows.”

The good news is this could push NS&I to hike rates further. 

NS&I hikes rates to keep up with the competition

Over the past year, NS&I has bumped up the Premium Bond prize rate and its fixed-term savings rates. 

In early July, it hiked its Premium Bond prize rate to 4% from 3.7%, the highest level in 15 years. It also boosted rates across a number of its fixed products. 

After recent hikes, its Guaranteed Growth Bonds and Guaranteed Income Bonds offer a rate of 5%, and the rates on Direct Saver and Income Bonds stand at 3.40%. 

But despite the increases, the rates still lag those on offer from other lenders. 

Indeed, while the country’s biggest banks have been slow to pass higher interest rates onto savers, forcing the FCA to take “robust action,” challenger banks are now offering rates of over 6% on fixed savings and of over 4% on easy access accounts. 

“We’ve already seen lots of interest rate rises from NS&I but more will surely be coming as the government-backed savings provider saw another drop in flows in June,” says Suter. 

“Taking a punt on Premium Bonds was a more attractive gamble when interest rates were rock bottom, but savers now are giving up 4.5% or more on an easy-access account for the chance they might win big on Ernie, which is a tougher call to make.”

Why could NS&I boost its rates?

Not only does NS&I need to keep up with competitors, but it also has a new funding target it has to hit. Both of these factors could push it to hike rates again. 

NS&I is a funding source for the Treasury and, as such, is 100% guaranteed by the government.

And with the country’s budget deficit running at one of the highest levels in recent history, the government has asked NS&I to try and raise more money for the state.

In his Spring Budget Jeremy Hunt set the bank a funding target of £7.5bn with an option to raise an additional £3bn, up from £6bn the previous tax year.

This means NS&I has to attract more business. There are a few things it could try in order to do so.

The target’s increase to £7.5bn “isn’t a huge leap, which means we’re unlikely to see the need for brand new products in order to stimulate demand,” says Sarah Coles, head of personal finance at Hargreaves Lansdown.

“Instead, it could hike the maximum holding in various accounts – including Premium Bonds,” adds Coles. “However, it would mean attracting more cash from the super-wealthy, which doesn’t help it towards its goal of enabling more people to build a savings habit, which makes this more improbable.”

“What’s far more likely is it deciding to boost rates overall to keep savers keen. This is likely to mean it keeps pace with any further rises in the market overall, and may also need to become slightly more competitive.”

“As ever with NS&I, it’s highly unlikely to be market-leading,” says Coles. “However, given the fact it is 100% guaranteed by the Treasury, there will be some savers who don’t need NS&I to be the best rate on the market to be very attractive indeed.”

National Savings & Investments (NS&I) is hiking its Premium Bond prize fund rate from 3.15% to 3.3% in the March draw, meaning there will be an extra £15 million in prizes up for grabs each month.

It marks the fifth rate increase for Premium Bonds in the last year, and the third increase in a row, as NS&I tries to lure savers and compete with rising interest rates on savings accounts.

As well as the Premium Bond change, NS&I announced interest rate rises for its Direct Saver account and Income Bonds. It called the trio of rate hikes a “Valentine’s Day boost to savers”. The changes include:

• Premium Bonds - prize fund rate of 3.15% will rise to 3.3% in March
• Direct Saver - interest rate rises from 2.6% to 2.85%, effective as of 14 February 2023
• Income Bonds - interest rate rises from 2.6% to 2.85%, effective as of 14 February 2023

The prize fund rate is currently at a 14-year high; last time the Premium Bond rate was more generous was back in May 2008 at 3.4%.

What does the change mean for Premium Bond customers?

Millions of Premium Bond customers will be excited to learn that the prize rate is increasing again. It was only last month that NS&I bumped up the rate, from 3% to 3.15%, and now it’s going up again.

The odds of each £1 bond winning a prize will remain at 24,000 to 1. The increase in the prize fund rate reflects the fact that the number of prizes worth £50 to £100,000 will increase from the March draw. There will still be two £1 million jackpots each month, and the number of £25 prizes up for grabs will fall. The number of other prizes will all increase. For example, the number of £100,000 prizes will rise from 59 this month to 62 in March.

“The Premium Bond prize fund getting a boost upwards now feels like a daily occurrence, rather than the once-in-a-blue-moon event it used to be,” commented Laura Suter, head of personal finance at the investment platform AJ Bell. “While the odds of winning will remain at 1 in 24,000, there’s another £15 million bunged into the total prize pot, meaning if you do win you’ll be more likely to net a bigger prize.”

NS&I, a government-backed savings provider, says the changes mean it continues to balance the interests of savers, taxpayers and the broader financial sector.

Are Premium Bonds worth it?

However, despite the increases, it’s worth noting that a 3.3% prize fund rate is not necessarily the best on the market when compared to the top savings rates. For example, you can currently earn as much as 5% from an easy-access savings account, and as much as 7% from a regular savings account.

And with the Bank of England expected to increase interest rates soon (base rate is currently 4%), better rates from banks and building societies may well be on the horizon.

It’s also important to note that a Premium Bond prize fund rate is not the same as a savings rate. With the latter, the saver is guaranteed to earn that interest rate on their cash. But a prize fund rate is an average rate for someone with average luck. In reality, some Premium Bond customers will earn less (some may not even win a single prize, especially if they only hold a small amount in bonds), while others will win more.

How many prizes are in each draw?

This is the estimated number of prizes we can expect to see next month (compared to this month).

Source: NS&I

National Savings & Investments (NS&I) has bumped up the interest rate on its Green Savings Bond - up from 3% to 4.2%. The bond is available on a three year fixed term.

The increase follows the government-backed bank’s relaunch of its one-year fixed bonds, as it attempts to bring in more savers and compete with the wider savings markets.

Recently, NS&I also bumped up the interest rate on its Premium Bonds, resulting in more premium bond prizes.

Savers have benefitted from better rates on savings accounts over the last few months as the Bank of England’s interest rate rises prompt providers to up their rates.

The green bonds were launched to help finance the green projects.“Customers can save while helping to make the world greener, cleaner and more sustainable,” Ian Ackerley, NS&I chief executive, said.

“The projects include making transport greener, using renewable energy over fossil fuels, preventing pollution, using energy more efficiently, protecting natural resources and adapting to a changing climate.”

Is NS&I’s Green Savings Bond right for me?

To benefit from the 4.2% rate, you will have to be willing to lock your money away for three years.

Fixed-term savings accounts tend to offer better rates than easy-access savings accounts or regular savings accounts, but they won’t be suitable if you need to access your money quickly.

However, if you have more than £85,000 in short-term savings, then NS&I certainly offers better protection as the money is safe with the Treasury backing. Regular banks only offer protection for up to £85,000 of your cash via the Financial Services Compensation Scheme, should a bank go bust.

The best one-year fixed savings accounts offer rates of up to 4.18%, so they might be a better option if you don’t want to part with your money long-term, especially given the rising cost of living.

The rate is competitive among other three year fixed-rate products on the market. The best three-year fixed rate cash Isa offers a rate of 4.11%, while Secure Trust Bank offers a rate of 4.4% on its three-year fixed rate bond.

NS&I first issued its Green Savings Bonds October 2021. As of March 2022, it had achieved sales of around £288m.

How much can you save in NS&I Green Savings Bonds?

The minimum investment is £100, with a maximum investment of £100,000.

There is a 30-day cooling off period if you change your mind, but after that you won’t be able to access your money until maturity.

Interest is calculated daily and added yearly on the investment’s anniversary date, but paid at the end of term.

You can purchase the bond online at nsandi.

National Savings & Investments (NS&I) has relaunched its one-year fixed bonds in a bid to lure back savers into the government-backed bank.

NS&I is offering rates up to 4%, making the bonds a strong contender against the best one-year fixed savings accounts.

Currently, the highest fixed savings account via Santander gives the same amount of return, unless you bank with Barclays, where existing customers can earn over 5%.

The Guaranteed Growth Bonds and Guaranteed Income Bonds are available for general sale for the first time since 2019.

From 1 February Guaranteed Growth Bonds will allow savers to earn 4% gross AER, while Guaranteed Income Bonds will offer 3.9%. These are the best rates both have offered since 2010.

The relaunch of the bonds follow recent increases to savings products and the interest rate on its Premium Bonds, which will see more winners in the February premium bonds prize draw.

Customers looking for the best savings accounts have benefitted from the Bank of England’s interest base rate rises, which has seen some banks increase their interest rates.

But those happy to lock their cash away for a year have another option and can benefit from the safety associated with NS&I’s Treasury backed guarantee, which exceeds the £85,000 cap set by the Financial Services Compensation Scheme.

How much can I save in NS&I bonds?

NS&I’s one year bonds have a minimum investment of £500, and a maximum of £1m.

If you’re looking for a short-term home for your cash holdings, the 4% rate looks competitive and is protected with the government seal of safety.

NS&I increases rates for existing customers

If you are an existing fixed rate bond holder, you can also benefit from the new rate.

Nearly half a million one, two, three and five year Guaranteed Growth Bonds, Guaranteed Income Bonds and Fixed Interest Savings Certificates accounts will also benefit from the new interest rates when their Bonds and Certificates mature if they decide to reinvest at maturity.

The two, three and five-year products are only available to existing customers with maturing products.

“With talk that savings rates may be past their peak, today’s news from NS&I will come as welcome news to savers looking to get the most by tying up their cash,” says Helen Morrissey, senior analyst at Hargreaves Lansdown.

“Savings rates have been starting to slide down in recent months, but these products are competitive and come off the back of further rate hikes for other NS&I products in the last few months.”

NS&I chief executive Ian Ackerley said the NS&I has “continued to respond to the current market to ensure that NS&I’s products are priced appropriately when compared with the rest of the savings market.

“This also ensures that NS&I continues to balance the interests of savers, taxpayers and the broader financial services sector.”

National Savings & Investments has bumped up the interest rate on Premium Bonds again at the same time when rate increases on some of its other products also kicked in. If you’re on the lookout for the best savings accounts for your cash, then could NS&I be worth another look?

The Premium Bonds prize fund rate will jump from 3% to 3.15% (effective from the February 2023 prize draw), representing another increase after the rate went up from 2.2% to 3% on 1 January 2023.

Other product rate increases include:

• Direct Saver - up 2.3% to 2.6%
• Income Bonds - up 2.3% to 2.6%
• Direct ISA - up from 1.75% tax-free to 2.15% tax-free
• Junior ISAs - up from 2.70% tax-free to 3.40% tax-free

More than 870,000 customers holding NS&I’s Direct Saver, Income Bonds and Direct ISA will benefit from the increased rates, plus 80,000 junior ISA account holders.

The new rate on income bonds at 2.6% is the highest NS&I is paying since 2008, and 2.15% on the direct ISA product is the highest seen in a decade. And the latest rate rise on the direct saver product at 2.6% is not the highest since it launched in March 2010.

Premium bonds rate rise - now at highest level in 14 years

The rate rise on premium bonds is the fourth increase NS&I has made in the last 12 months in a bid to lure savers into the government backed bank.

If you have premium bonds the rate actually means the number of prizes, worth between £50,000 and £100,000, will increase - so there’s a higher chance of you bagging a larger amount of prize money from February 2023.

NS&I chief executive, Ian Ackerley, said: “Today’s changes will provide a welcome boost for savers of all ages across the country, with more Premium Bonds prizes and some of the highest interest rates we’ve seen in over a decade.

“In a fast changing savings market, we’re committed to making sure our products remain competitive and our customers get a good return on their savings. Today’s changes ensure that we continue to balance the needs of savers, taxpayers and the broader financial services sector.”

However, despite the increases it is worth noting that the rates are not necessarily market leading and it will pay to shop around, as banks and building society rates on savings products have been creeping up in recent weeks; and with the Bank of England expected to increase interest rates again next month, better rates may well be on the horizon.

It's also worth noting that none of these rates are market-leading. For non-ISA savings you can make 2.9% elsewhere from the first £1, without any restrictions, and even for ISA savings you can make 2.75% on the same basis. And you could get 3.8% on cash junior ISAs from Coventry Building Society.

“This is effectively NS&I playing catch up after the easy access market has crept up with successive interest rate rises,” Sarah Coles, head of personal finance at Hargreaves Lansdown commented.

What are the chances of winning per bond?

According to NS&I, this is the estimated number of prizes we can expect to see next month.

Number and value of Premium Bonds prizes

Source: NS&I

Millions of savers will see their savings boosted after NS&I interest rates jumped to their highest levels in years. The savings provider has lifted the rate paid on its Direct Saver and Income Bonds from 1.80% to 2.4%, the highest in over a decade, although these are still below the rates savers could get from banks.

The higher rate will kick in today (13 December 2022), benefiting more than 570,000 customers.

Meanwhile, NS&I has also increased the interest rate it pays on its Investment Account (a postal-only savings account) from 0.4% to 0.6%.

NS&I said the changes will ensure it continues to “balance the interests of savers, taxpayers and the broader financial services sector”.

Still, with the interest rate on one regular saver account now sitting at 7%, NS&I interest rates are hardly the best on the market.

NS&I interest rates rise on all of the provider’s products

This is the second time in as many months that the savings provider has increased the rates on its savings account.

NS&I interest rates were last raised in October. At the end of the month, it lifted the rate paid on its Direct Saver and Income Bonds from 1.20% to 1.80%, the highest in over a decade.

The group also increased the rates on its Junior Isa and its Investment Account to 2.70% and 0.40% respectively.

It also announced that the rate on its fixed-term savings products would rise.

From 1 December NS&I interest rates on the one-year fixed Guaranteed Growth Bonds rose from 1.85% to 3.6%. One-year fixed Guaranteed Income Bonds saw rates rise from 1.8% to 3.5%.

As well as these interest rate increases, NS&I has boosted its Premium Bonds prize fund rate yet again. It’s the third hike this year for Premium Bond owners and means an additional £80m in prizes is up for grabs in the January prize draw. The prize fund rate is now 3%, up from 2.2% and more than double the rate of 1.4% six months ago.

NS&I interest rates have been rising in line with the rest of the market as the Bank of England has increased its lending rate. The central bank is trying to calm inflation by raising rates, which should reduce spending and increase saving, and projections suggest interest rates could rise to a high of nearly 5% next year.

What is NS&I and what does it offer?

NS&I (National Savings and Investments) is a government-owned bank backed by the Treasury, which means any money you have stored with them is 100% secure. There’s no limit on the amount you’d get back if the NS&I collapsed, which is particularly appealing to those with more money to put away as not all savings institutions will protect and return 100% of your cash should things go wrong.

The savings bank is well known for its Premium Bonds, which offer savers the chance to win between £25 and £1m tax-free every month. Investors get a unique bond number per pound they invest, meaning the higher your investment the better your odds of winning. You have to hold the bonds for a calendar month to be able to be entered into the prize draw and you don’t gain interest on your savings.

You can also purchase Green Savings Bonds, which have a 3% interest rate, fixed for three years. You cannot take your cash out until the bond reaches the end of its term and interest will be taxable once you do. You can invest as little as £100 and up to £100,000.

If you open a Direct Saver account you can take money out without notice or penalty, and you will pay tax on your gross interest. You can pay anywhere between £1 and £2m per person and manage the account online or by phone.

The maximum amount you can pay into NS&I’s Direct Isa is £20,000 a year, and you can start with as little as £1. The account is totally tax-free and you can take money out at any time without fees.

You can open a Junior Isa with £1 and save as much as £9,000 a year. You can’t take the money out, though – when the child turns 18, it is theirs to do with as they wish. The account is tax-free.

NS&I’s Income Bonds pay out interest every month and offer easy access to your money – you can take it out at any time with no fees. You will pay tax on your gross interest and need £500 to open one. The most you can invest is £1m.

With 25 million customers, NS&I is one of the largest savings organisations in the UK, however, this doesn’t mean it offers the best returns.

Right now you can earn as much as 5% on one-year fixed savings accounts, a far better deal than NS&I’s best offer. You can look at our guide to the best savings accounts to see how they compare.

By Nicole García Mérida with contributions from Rupert Hargreaves.

All the banks featured here are protected by the Financial Services Compensation Scheme (FSCS), meaning up to £120,000 of your savings are protected should a bank or financial firm go bust.

Easy-access savings accounts are a popular option for savers who want flexibility without sacrificing returns.

These accounts typically offer some of the top savings rates on the market while allowing penalty-free withdrawals, making them well-suited for emergency funds and short-term savings goals.

Currently, the leading easy-access rate is 5.01% AER from Oxbury Bank. If you want to lock in rates before they drop any further, you can opt for a one-year fixed savings account, currently paying up to 4.91% AER.

Those hoping to maximise their tax-free savings allowance may also want to consider the best cash ISAs.

Below, we round up the best easy-access savings accounts on the market.

Best easy-access savings accounts

Revolut Instant Access Savings – 5% AER

If you open a Revolut Instant Access Savings account before 4 August, you can benefit from a boosted rate of 5% (variable) on your cash. You have to be a new customer, and the rate applies for savings of up to £25,000.

After 4 December 2026, the rate will revert to 2.9% for customers on a Standard (Free) or Plus Plan (£3,99/m), 3.25% on a Premium Plan (£7.99/m), 3.4% on a Metal Plan (£14.99/m) and 4% on an Ultra Plan (£55/m).

The maximum amount you can save is £5 million. ClearBank powers Revolut’s savings account, so customers are still eligible for FSCS protection for up to £120,000 of their savings via ClearBank Limited. Interest is paid daily. The account can be opened through the Revolut app.

LemFi Instant Access Savings Account – 5% AER

The easy-access savings account is from LemFi, a financial services platform that is powered by ClearBank. You can earn a boosted rate of 5%, which will revert to 3.04% after six months. Savers can fund the account from just £1 and go up to £250,000 – though it's worth noting that only £120,000 of the amount will be eligible for FSCS protection. Interest is paid monthly or at maturity, and the account can be opened on the LemFi app.

Tembo Money HomeSaver – 4.55% AER

Tembo Money is a savings provider and not a bank; therefore, it doesn’t have its own savings accounts. The FSCS will still protect your money up to £120,000. You can earn 4.55% (variable) on your savings, which includes a 1.55% fixed bonus for 12 months.

You can also get a conditional 1% fixed HomeSaver bonus – payable if you complete a mortgage through Tembo Money Limited within three years from opening this account.

You can’t make over three withdrawals in one calendar year, and the account can be opened with just £10, up to 25,000. Interest is paid annually, and the account can be opened online via the Tembo app.

Chase Saver With Boosted Rate – 4.5% AER

You can earn a 4.5% boosted rate within your first 31 days of opening a Chase saver. It includes an extra 2.25% AER boost for 12 months on top of the standard variable rate. There is no minimum deposit requirement, and you can go up to £3 million. This offer is only available to new customers. Interest is paid monthly, and the account can be opened online.

Ulster Bank Limited Edition Saver Account – 4.3% AER

This Ulster Bank limited edition saver pays 4.3% interest, which includes a fixed 12-month bonus of 2.75%. The top rate is paid when you save between £5,000 and £3 million – though only up to £120,000 of your savings will be eligible for protection under the FSCS. Interest is calculated daily and paid on the first business day of each month and at maturity. The account can be opened online.

United Trust Bank UTB Limited Access Saver Account – 4.3% AER

UTB is paying a variable rate of 4.3% if you save anywhere between £5,000 and £150,000. Only £120,000 of your balance is eligible for FSCS protection, and you will have 14 days after you submit your application to fund your account. If you make over two withdrawals, your rate will drop to 2.75%. Interest is calculated daily and paid annually on 31 October and at maturity. The account can be opened online.

Mansfield BS Triple Access Bonus Saver – 4.25% AER

This account from Mansfield BS pays 4.25% if you save between £1 and £400,000, of which only £120,000 is eligible for FSCS protection. The interest rate includes a 1% bonus that is fixed for the first 12 months, after which it reverts to 3.25%. You can access your funds thrice each calendar year, and open the account in person or via post. Interest is payable annually.

Hampshire Trust Bank Online Easy Access Account – 4.24% AER

This easy-access account pays 4.24% interest, and you have the freedom to withdraw money without incurring penalties. You can open this account with just £1 and save up to £250,000. But only up to £120,000 is protected by the FSCS. Interest is paid yearly. The account can be opened online and managed over the phone, via post or online.

Sidekick Multi Shield – 4.23% AER

This saver can be opened online with a minimum balance of £10,000. The interest rate is 4.23% (variable) and includes a 1% bonus for six months on your first £120,000. It's worth noting that Sidekick partners with UK-regulated banks to provide its savings products. The rate is also a blended rate, which means that your first £120,000 is deposited at a higher rate partner bank, the second £120,000 at the next highest rate bank, and so forth. Since the above deal lets you allocate your funds across multiple banks, it is eligible for FSCS protection of up to £360,000. It is operated by Bondsmith.

Cynergy Bank Easy Access Account – 4.23% AER

You can grow your savings with 4.23% interest, which includes a 2% fixed bonus for the first 12 months. This saver can be opened with just £1, and you can save up to £ 1 million. Note that only £120,000 of your money will be protected by the FSCS. You can open this account online, and interest is paid annually.

Secure Trust Bank Access Account – 4.21% AER

You can open this account with just £1. You can save a total balance of £250,000, but only £120,000 will be FSCS-protected. The account must be opened online, but can be managed either by phone or using internet banking. Interest is paid monthly or at maturity.

Yorkshire Building Society Triple Access eSaver – 4.2% AER

Save anywhere from £1 to £500,000 in this Yorkshire BS account. You can make up to three withdrawals in a year, except for the first 14 days after opening your account. If you make a withdrawal using CHAPS, you will incur a fee. Interest is paid yearly and you can open the account online.

How do easy-access savings accounts work?

Easy-access savings accounts let you flexibly save your cash, by making as many withdrawals as you like without incurring a penalty.

You will earn a variable interest rate, which means that the provider can increase or decrease the rate on your savings account as they choose, which is usually the case when the Bank of England cuts the base rate.

If a market-leading account that you opened a few months ago is not offering a good rate anymore, it's worth shopping around regularly to ensure your savings are working as hard as possible.

When can I withdraw money with easy-access savings accounts?

Traditionally, easy-access accounts should give you unlimited and flexible access to your savings.

However, there is now a trend for savings accounts to restrict the number of withdrawals – while still calling the account "easy-access". If you breach the limits, the penalty is normally a loss of interest, or falling onto a lower interest rate.

It means you'll need to look carefully at any restrictions on withdrawals (which could limit the frequency or the amount you take out) before opening an easy-access account.

This article details 2022 winners - see our article on the December 2023 bond winners for the latest.

NS&I (National Savings & Investments) has announced the winners from the December prize draw, which includes two jackpot winners.

The NS&I Premium Bond jackpot winners come from Wandsworth and the Scottish Highlands – if you live there and hold Premium Bonds, you could be in for an early Christmas treat.

The first winning bond number is 414XW486235 and belongs to someone in the Scottish Highlands. The winner holds £45,000 in Premium Bonds and purchased the winning bond in September 2020.

The second winning bond number is 150FZ477948 and belongs to someone in Wandsworth. The winner holds £29,042 in Premium Bonds and purchased the winning bond in August 2009.

The two jackpot winners will have been visited by NS&I’s “Agent Million”, who gave the news about the win in person.

If you didn’t win the jackpot, then you could still be a winner of some sort with a total of 4.9 million prizes being released this month, ranging from as little as £25 to as much as £100,000. The total value of the December Premium Bond prizes was £219m. You can check if you are a winner from 2 December - we explain below how to check.

The number of prizes given out each month was raised in October, meaning that the odds of winning has improved to 24,000 to one. Earlier this year, NS&I also increased the interest rate on its savings products to entice more savers in.

December NS&I Premium Bond winners: the breakdown of the prizes

Here are the prizes picked by the NS&I’s Ernie – the machine that generates the winning numbers.

Around £80m in Premium Bond prizes are currently sitting unclaimed, so it is worth checking if you are a winner – not just for the December draw but also for any previous months or years. See our article on the November Premium Bond prize draw.

How to check if you are a Premium Bond winner

It’s easy to check if you are a NS&I Premium Bond winner. December winners can check on 2 December. Here are all the ways to check:

• Use the prize checker feature on the NS&I website
• Download NS&I’s prize checker app onto your smartphone
• Ask Alexa. You can even state your NS&I number to a device that has Amazon’s Alexa service enabled, and check if you’re a lucky winner.
• If you have registered online with NS&I then you will be sent an email – so check your inbox/spam folder. However, if you haven’t done so then you’ll instead be sent a letter.

Make sure NS&I has the correct contact details – not updating your details could result in you missing out on any notifications and unclaimed prizes.

Premium Bonds vs savings accounts

The return you get from Premium Bonds will come down to how lucky you are. The NS&I says there’s a one in 24,000 chance of one bond winning a prize a month. Essentially, the more you hold and the greater the value, the higher your chance of winning, but calculating the real probability of you winning a decent prize is complicated.

If you’re looking for a more reliable return on your money, you might want instead to use a traditional savings account, with some banks offering as much as 5% interest.

Two Premium Bond holders have become millionaires after landing the jackpot prize in November’s draw.

National Savings & Investments (NS&I), which runs the Premium Bond accounts, has revealed that one jackpot winner is from Essex and holds more than £25,000 in bonds. They purchased their winning bond, which has the number 245PK699534, in May 2015.

The second winner is based in Hertfordshire, and holds £15,000 in Premium Bonds. They bought their winning bond in June last year, which has the number 460WE462342.

Outside of the two jackpot winners, millions of Premium Bond holders will be receiving prizes ranging from £25 up to £100,000. What’s more, the number of prizes given out each month was raised in October, meaning that the odds of winning has improved to 24,000 to one. Last month, NS&I also increased the interest rate on its savings products to entice more savers in.

In total, just under five million prizes are being handed out by NS&I this month. Here, we explain how to check whether you’re in line for one, and whether Premium Bonds are really worth going for.

How to check if you’ve won a Premium Bonds prize

There are a few different methods for bondholders to check whether their number has been selected by ERNIE, the NS&I computer which selects the winners each month.

For example, you can head to the NS&I website, which has a prize checker feature, or download NS&I’s prize checker app onto your smartphone.

You can even state your NS&I number to a device that has Amazon’s Alexa service enabled, and check if your luck is in.

If you have registered online with NS&I then you will be sent an email, to notify you of your prize. However, if you haven’t done so then you’ll instead be sent a letter.

As a result, it’s a good idea to check that NS&I has the correct contact details for you, to ensure that you don’t miss out on a prize. Premium Bond prizes do go unclaimed, with some dating back decades, worth thousands of pounds.

Premium Bonds vs savings accounts

Back in October NS&I increased the prize rate on Premium Bonds from 1.4% to 2.2%. The prize rate effectively outlines what sort of return you are likely to get if you have average luck.

However, ultimately the return you get will come down to how lucky you are ‒ you could get a far better return, or you could hold the Premium Bonds forever without winning a prize.

Those looking for a more reliable return on their money might want instead to use a traditional savings account. If you want access to your money, then the top easy access account for those opening an account with £1,000 comes from HSBC, and pays 3%.

You can get a better return if you are willing to lock your money up for a longer period too. With Oxbury Bank savers can enjoy a rate of 4.65% for a one-year bond, while a two-year bond from the Bank of London and the Middle East has an anticipated profit rate of 5%.

It has an anticipated profit rate, rather than a normal interest rate, because it is a Sharia-compliant account. See our article on Sharia finance to get a better understanding of how these accounts work.

Ethical investing is becoming more popular as savers want to know their investments aren’t harming the planet. If you’re concerned about this, it’s also important to look into what the cash in your bank account is funding.

When you deposit cash with a bank, it doesn’t sit around in a vault waiting for you to come back and withdraw it. Banks use their cash deposits to fund lending. This could be mortgages or car loans, but also larger corporate loans that could be funding industries that are damaging the planet, such as airlines or oil companies.

You can avoid this by putting your cash into an ethical bank account. These are banks, or in some cases just accounts, where your money is used to fund companies and projects that aim to improve the planet and society.

The new kid on the block

One such example is the National Savings & Investments (NS&I) Green Savings Bond. NS&I is backed by the Treasury and this account has been launched to help the government fund its efforts to hit net-zero carbon emissions by 2050. The idea is we all pour our money into the Green Savings Bond and for the government to use that cash to fund projects such as offshore wind farms, carbon capture projects and making old buildings more energy efficient.

While the account has noble intentions the initial launch was a let down. Back in October the three-year fixed rate account was paying 0.65%. It has been refreshed and the rate has been doubled to 1.3%. NS&I has said the rise simply reflected interest rate movements within the market, but experts aren’t convinced. “What’s more likely is that the initial launch, which at the time offered the same interest rate as an easy-access current account, went down like a lead balloon and NS&I had no choice but to raise the rate to draw in more money and reach its funding targets,” Laura Suter, head of personal finance at AJ Bell, told the Financial Times.

Shop around to secure the best rates

That said, if you are looking for an ethical savings account, then you can still do better than the Green Savings Bond. NS&I pays 1.3% over three years but Tandem Bank’s three-year fixed saver pays 1.9%. The challenger bank turned environmentally friendly last year and now uses deposits to fund green lending, although it is still a bit vague about exactly how it is using your money to improve the planet.

You could get an even better rate with Al Rayan Bank’s 36-month fixed term deposit with an expected rate of 2.01%. This is sharia banking, which means your money cannot be used to fund businesses forbidden under Islamic law. That includes alcohol, tobacco and gambling so it is an ethical option, but not specifically green (ie, sharia loans are not necessarily used to improve the planet – they could still fund oil and gas projects, for example).

Options for the shorter term

With all these accounts you are locking your money away for three years, in which time interest rates could rise, leaving you behind. Just look at those who invested in the first NS&I Green Bond back in October. A few months later the interest rate doubled but they are stuck earning 0.65% for another two and a half years.

If you want a green savings account but don’t want to be locked into a long-term rate then another option is RCI Bank’s 14-day notice E-Volve Savings Account. This account pays 0.7% and your money is used to fund electric vehicles and charging facilities. You can beat this with non-green accounts with longer notice periods, but it is a competitive rate for such a short notice period. However, Tandem pays 0.77% on an instant-access green savings account, which is almost at the top of the tables for any instant-access account. It is only beaten by Cynergy Bank’s 0.84% (which is just for one year, after which it reverts to 0.3%).

Ethical and green cash accounts tend to offer slightly less competitive rates than traditional accounts, but the gap is closing. If these accounts prove popular it will hopefully encourage the wider banking industry to start offering similar products.

National Savings & Investment (NS&I) has just launched a “green” savings bond.

It’s terrible value. You’d be silly to put your money in it.

But it does rather reveal what the purpose of “green” finance really is.

You will almost certainly lose money after inflation if you put your money here

You can’t expect NS&I to pay market-beating interest rates – it has an unfair advantage over every other savings institution in that it is fully backed by the Treasury. This probably didn’t mean a lot to most of us until the financial crisis, but at that point people started to understand that there are certain circumstances in which your bank could conceivably go bust, which gave NS&I an extra competitive advantage.

So you wouldn’t expect its new green savings bond to have offered a particularly exciting interest rate.

But even taking that into account, to invest in its new product, you’d have to be pretty committed to the idea of lending money to the government to spend on “green” stuff. Because at this rate, you are almost certain to lose money in real terms, even given NS&I’s tax and security advantages.

Inflation in the UK is currently running at anything from 3.1% to 5% depending on whether you prefer CPI (new money) or RPI (old money). Measuring inflation is a tricky business – everyone has a different rate and it’s very political too (you can read more about it here if you want to understand the differences more).

But, whichever way you look at it, 0.65% doesn’t even touch the sides in terms of compensating you for inflation. We’d have to have a pretty drastic bout of deflation within the next three years for 0.65% to be anything approaching reasonable – and, frankly, I can’t see that happening.

More importantly, you can already get higher-paying equivalent rates elsewhere. As various comparison services and savings experts point out, you can get three-year fixed-rate savings bonds that pay almost three times as much. I still wouldn’t want to lock up my money for three years at 1.8% (you’ll note that’s still well below inflation) but given the choice between 0.65% and 1.8%, it’s clear which is better.

Moreover, you can get 0.65% on some easy-access accounts too. So you don’t need to lock up your money for three years at all to get a massively-below-inflation savings rate. And as Rachel Springer of Moneyfacts.co.uk points out, those who want to save with some sort of moral element involved, “could also seek out mutuals which support local causes”.

In short, you can get similar products paying better rates elsewhere. It’s all very disappointing, reckon the personal finance writers.

Green finance is the future – and the future is financial repression

They’re right of course. This is a pitiful rate. I think you’d be daft to put money in it.

However, what people are perhaps missing to an extent, is that this is the point of green finance. In fact, it’s rather the point of “green” anything.

With a non-green investment product, what you care about is the money you can make. With a “green” investment product, in theory, you care about two things: the money you can make, and the good that you can do.

In other words, you’re getting two benefits, not one. And the way markets work, you have to think of the second benefit – the “do-gooding” – as being a “benefit-in-kind”. There’s even a name for it – the “green-ium” (as opposed to “premium”).

Now, there’s no such thing as a free lunch, so if you want to get a “green-ium”, you’re going to have to give away some of your financial return. Plenty of people are happy to do so, but it’s worth going into this with your eyes open.

That’s the first thing to understand. The second thing to understand is that this “green-ium” is going to be exploited very heavily by governments in the years and even decades to come.

To put it simply, governments are up to their eyeballs in debt. The situation was already pretty unpromising before the financial crisis and the pandemic made it a lot worse.

The best way to deal with this debt is to inflate it away. You can only inflate it away if people are willing to lend you money at interest rates which are lower than inflation.

How do you do that? You have to hold rates down somehow. This is known as “financial repression”. It’s hard to do because people don’t tend to volunteer to lend to you if they know they’re going to make a loss.

We’ve seen one way to do it: get a friendly central bank to lend money to you without asking any questions. That’s what we’ve been doing since roughly 2008. However, that’s going to be harder as inflation rises, given that central banks are meant to tackle inflation.

So what’s the solution? As MoneyWeek’s favourite financial historian, Russell Napier, has pointed out on several occasions, you force institutions to own government debt. And the nice thing about slapping the “green” label on them, is that you can now attribute a moral cause to the mandate (and let’s be honest here, you can slap a “green” label on pretty much all government debt and justify it in some way).

Your pension fund will be making a valuable contribution to preserving the environment for future generations. There’s almost something poetic about it, which I’m sure will be a comfort as you watch it lose money in real terms.

Anyway, what will be most interesting here is how successful this NS&I bond is. The thing about individual savers like you and I is that we don’t have green mandates to contend with. We don’t have to worry about regulators checking how green our lending book is (as is about to happen with mortgage loans, for example) and we don’t especially have to worry about our personal brand (well, most of us don’t).

So I’ll be very interested to see exactly how much value investors place on the “greenium”. And I’m sure the Treasury will be too.

By the way, this is a topic that will almost certainly come up in our discussions at the MoneyWeek Wealth Summit. Get your ticket here!

National Savings & Investments, or NS&I, is losing its reputation as the nation’s favourite savings institution. “I’ve long been a champion of NS&I... and I know many readers feel the same way,” says James Coney, Money editor of The Sunday Times. “Or at least, they did.”

So what’s gone wrong? It started in spring when Treasury-backed NS&I was given extra funding so it could offer better rates. “Customers flocked to it, but like many financial institutions it faced the challenge of keeping service levels up when lockdown came,” says Coney. “Phone waiting times rose from ten seconds to 12 minutes.”

After that there were changes to Premium Bonds that meant winners couldn’t be paid by cheque anymore. So millions of customers needed to sign up online, but long waiting times on the phone meant many struggled to get help registering for internet log-in details.

“The decision to stop sending Premium Bond prizes out by post was made to save paper,” says Fiona Parker in the Daily Mail. “However, the bank’s Direct Isa customers are now discovering they cannot move their money online – ironically forcing them to fill in a form and put it in the post in a process that can take weeks.”

The final insult came last month when NS&I slashed interest rates, in some cases from 1.15% down to just 0.01%, and lengthened the odds of winning on the Premium Bonds.

As a result, millions of customers are trying to take their money elsewhere. “But those trying to move their money are having to wait weeks as they struggle to navigate the... new website or to speak to anyone about it on the telephone,” says Parker.

“Enough is enough,” says Coney. “It is time for the Treasury select committee to haul in NS&I‘s boss Ian Ackerley to investigate this fiasco…this is one of Britain’s... most loved financial institutions being badly run, lumbering from one disaster” to the next.

There is rarely good news for savers these days, but one beacon of light in 2020 has been National Savings & Investments (NS&I). The Treasury-backed savings bank has offered market-beating interest rates for months. But no longer. NS&I is cutting its rates on several accounts as well as significantly lengthening the odds of winning the monthly prize draw with Premium Bonds. It claims it “had no choice but to act because savers had put away billions more during... lockdown, which left it in danger of breaching its government-mandated funding limit for the year”, says David Byers in The Times.

In July alone savers deposited £9bn, nine times the normal level. Because it is backed by the Treasury, NS&I is not allowed to get too competitive; the government sets a limit on how much money it can accept each year. That limit – known as its net financing target – is £35bn. It is believed to have brought in £23bn already this year.

So the axe has come out to make accounts less attractive. “The savageness of the cuts will be devastating,” says Anna Bowes, co-founder of Savings Champion. “The competition we have seen in the savings market could swiftly end, as providers could be swamped with new money.”

NS&I has slashed the rate on its Income Bonds from a market-leading 1.16% to just 0.01%. Its Direct Saver will drop from paying 1% to 0.15%. The Investment Account will pay 0.01%, down from 0.8%. Junior Isa (individual savings account) accounts will drop from 3.25% to just 1.5% and the Direct Isa interest rate falls from 0.9% to 0.1%. All these rate declines will occur on 23 November. To cap it all, Premium Bonds will become much less attractive. From the December draw the odds of a £1 Premium Bond number winning a prize will lengthen from 24,500-to-1 to 34,500-to-1. There will be a million fewer prizes handed out to holders.

So what should you do now? If you are going to move your money, act fast. Savers “may have only a few days left before smaller banks that generally offer the top rates trim them”, says Stefan Wagstyl in the Financial Times. Several of the best deals have already vanished. At the time of writing, the top easy-access accounts were Yorkshire Building Society’s Internet Saver Plus, which pays 0.95% on balances over £10,000, and Principality Building Society’s Web Saver, which pays 0.8% on all balances. However, if you are prepared to limit your access to your cash to only two withdrawals a year then Coventry Building Society’s Double Access Saver pays 1.10%, while Principality Building Society’s Online Limited Access pays 1.05% but allows three withdrawals.

Those who have unused individual savings account (Isa) allowances could look at Cynergy Bank’s Online Isa, which pays 1%. You can make as many withdrawals as you like, but it’s not a flexible Isa (ie, money paid in and withdrawn still counts against your Isa allowance). Coventry Building Society’s Triple Access Isa pays 0.96% and is flexible but only allows three withdrawals per year; Principality Building Society’s Web Isa pays 0.95%, is flexible and lets you withdraw as often as you like.

The best rate available is 1.6% with BLME’s Premier Deposit Account, but that is a five-year bond. You can get 1.36% for two years (and 1.26% for one year) on Gatehouse Bank’s Fixed Term Deposit.

With interest rates at historic lows savers have been suffering. But the government has now thrown them a lifeline by boosting the National Savings & Investments (NS&I) deposit limit. NS&I is state-owned and backed by the Treasury. This means your money is 100% guaranteed by the government. With deposit limits of up to £2m on some accounts this makes it an excellent choice if you want to lock away large sums of money safely.

The added attraction of NS&I at present is that it is offering three of the five top-paying savings accounts on the market. However, this has caused a surge in deposits, which creates a problem. Because it is government-backed, NS&I isn’t allowed to take in too much money. So, every year a cap is put in place limiting total deposits.

Until last week this cap was £6bn for the current financial year. But from April to June alone savers deposited £14.5bn. This meant a rate cut was expected. This is usually the case when NS&I hits the deposit limit. It slashes interest rates and closes accounts. But not this time. “NS&I has been asked to bring deposits of £35bn by next April to help the government fund the costs of coronavirus recovery schemes,” reports Adam Williams in The Daily Telegraph. The move should “prevent savings rates... from falling further.”

All this means it is a good time to check what interest rate you are currently earning on your savings and see if you would be better off shifting your money to NS&I. If you are looking for an instant-access account, then NS&I’s Income Bonds top the best buy tables, paying 1.15%. You can deposit between £500 and £1m into the account and make withdrawals whenever you like. Just be aware that the minimum withdrawal is £500. This account can be managed online, by phone or post.

NS&I’s Direct Saver account pays 1% on deposits from £1 to £2m and allows unlimited withdrawals of any amount without notice. You can access your account online or by phone. Then there is the so-called Investment Account, which is actually just an easy-access cash savings account. You can save between £20 and £1m and earn 0.8% interest. It can only be operated by post.

All in all, you could tuck up to £4m into NS&I’s best-buy accounts safe in the knowledge your money is 100% guaranteed. Just make sure you keep an eye out for better deals if savings rates eventually start to improve.

Premium bonds have long held a special place in the nation's hearts. Despite not paying any interest, the lottery bonds are the most popular savings method in the UK a staggering 21 million of us hold them. But if you are foregoing a guaranteed return on your savings in the hope that you are going to win big, be warned. The number of large prizes has just been cut again. From May this year, there will be one fewer of the £100,000 prizes handed out every month (there will be only two from then on) and there will also be two fewer £25,000 prizes (nine instead of 11). Your chances of winning any prize at all won't change the odds will remain a lengthy 30,000 to one but there will be more £25 prizes to make up for cuts to the number of bigger prizes.

The cut in the frequency of big prizes is happening because National Savings & Investments (NS&I) is cutting the prize fund rate. This is set in line with typical savings rates and is currently 1.25%, but will fall to 1.15% in May to reflect falling interest rates across the savings market. "The new rates reflect current market conditions and allow us to continue to strike a balance between the needs of our savers, taxpayers and the stability of the broader financial services sector," says Steve Owen of NS&I.

In these glum times for savers, the hope that they could be next month's jackpot winner seems to keep premium bond holders going. "Ironically, with so little interest on cash for savers, premium bonds look more attractive if your savings are returning basically nothing, you might as well opt for the chance of a jackpot prize," Danny Cox, chartered financial planner at Hargreaves Lansdown, told the BBC. There are other benefits too. Your money is 100% guaranteed by the Treasury, making it the most risk-free thing you can do with your savings, and the prizes, should you win, are tax-free.

However, this cut to the prize fund should act as a wake-up call to premium bond holders. If any other savings account saw a cut in its interest rate, customers would be heading for the door looking for a better deal elsewhere. But the number of people holding premium bonds doesn't ever seem to be affected by falling prize rates. If you want your money to keep up with inflation, you are better off moving it to an account paying you a guaranteed rate of return.

Better places foryour savings

Leave your money in premium bonds, and the low average returns mean inflation is likely slowly to eat away at the value of your savings. There are far better choices. If you want the state-backed safety of NS&I, then consider the investment guaranteed growth bond, which is being launched this spring. This is also 100% guaranteed by the Treasury, but is expected to pay 2.2% interest for three years.

Alternatively, if you only hold a small number of bonds, move your money into a high-interest account. Tesco Bank's current account that pays 3% interest on balances up to £3,000 has proved so popular that the bank has had to stop accepting new applications. But Tesco says this is only a pause, so be ready when it reopens. In the meantime, Nationwide's FlexDirect account pays 5% interest on balances up to £2,500, provided you pay in £1,000 a month.

If you are prepared to take a significant step up the risk scale, then look at peer-to-peer investing. You can get returns of up to 6% with the likes of Zopa, RateSetter and Funding Circle but your money won't be covered by the Financial Services Compensation Scheme. So, if the peer-to-peer firm goes bust or losses on loans are greater than expected, you could lose your savings.

Finally, if you like the thrill of a prize draw, there are ways you can earn interest at the same time. Halifax's Savers Prize Draw pays out three jackpot prizes of £100,000 each month, plus thousands of smaller prizes. To enter, you have to hold £5,000 in qualifying Halifax accounts. The interest rates aren't table-topping 0.65% for a one-year Isa or 0.25% for an easy-access account but at least it beats premium bonds.

In the news this week

Many people who set up trusts to limit inheritance tax (IHT) liabilities need to hurriedly "re-arrange their affairs" or risk missing out on a "valuable new tax perk", says Sam Brodbeck in The Daily Telegraph. Roughly 16 million adults have written wills; of those, especially those written prior to 2007 (the year IHT rules changed), many are likely to have included a trust. However, from 6 April this year, the new "family home allowance" for IHT takes effect, and trusts are "explicitly excluded" from this.

The allowance is generous: by 2020-2021, at which point the changes will have been fully rolled out, couples will be able to pass on a £1m property IHT-free. Given that the trust itself is not triggered until the death of the first parent, beneficiaries then have two years from the death of the second parent to "disband the trust", using a "deed of variation" to make sure they can use the allowance. All parties beneficiaries and trustees must agree. If nothing is done in that time, beneficiaries will have to stick to the original will, and the allowance is "lost for good".

Pensioners also need to act by the end of the tax year to snap up a "rare government offer" to "turbocharge" their retirement income, says Teresa Hunter, also in The Daily Telegraph. The government offered up to 12 million people who reached state pension age before April 2016 the chance to "convert a lump sum into a guaranteed income for life on terms that are up to 133% better than those available on the open market"; yet the public has "largely ignored" it. Those who qualify can effectively buy a "government-backed index-linked annuity that pays almost 6% at the age of 65", compared with 2.5% on the open market.

When the scheme was launched in 2014, the decision wasn't so clear-cut; now that interest and annuity rates have fallen, the "attractions have grown substantially". "Almost everyone", apart from pensioners paying higher-rate tax with a lower life expectancy, would "gain by taking part", says pension consultants Hymans Robertson. Since individual circumstances may affect the desirability of this course of action, interested parties should seek financial advice.

Severn Trent is launching a Retail Price Index (RPI) linked bond aimed at retail investors. It will pay a real rate of interest (ie after inflation) of 1.3% a year for ten years and will mature in July 2022.

So is it one to add to your portfolio? Or should you ignore it? Let's take a look.

Why is Severn Trent doing this?

There are lots of reasons. On top of the money water companies get from customers' bills, they need extra cash to maintain and upgrade their water networks.

As a result, water companies regularly raise money from bond investors, and prefer to do this before asking their shareholders for more money.

But why go to retail investors for money rather than institutions? Well, private investors, fed up with the disappointing performance of the stock markets for many years, have been putting more money into bonds.

The trouble is that there are only a small number of bonds that retail investors can realistically buy. So many have put their money into bond funds, managed by professional investors, which are more expensive.

Companies are now wising up to the fact that they have a whole market of untapped lending available if they decide to approach retail investors direct.

And why index linked? This makes a bond more attractive to small investors because there are so few retail investment products available that offer to protect the purchasing power of their money.

National Savings & Investments (NS&I) has withdrawn its popular index-linked savings bonds. There are a few RPI-linked savings products on offer elsewhere, but there's not much to choose from.

Last year National Grid exploited this gap in the market and issued an index-linked bond to private investors. And in general in recent years, regulated electricity and water companies have been taking on more inflation-linked debt. It makes sense for them to do so.

That's because most of their assets and revenues are linked to changes in the RPI. So given that these companies borrow a lot of money, it makes sense to have some loans and interest payments linked to the RPI to hedge against risk.

For example, if inflation were to turn to deflation, the interest payable on index-linked debt could actually go down, whereas it would not with most other forms of debt.

So how will Severn Trent's bond work?

You can apply for the bonds through your stockbroker - you must do so before the close of business on 4 July. The bonds will be sold in multiples of £100, and the minimum initial amount that you can purchase is £2,000.

MoneyWeek videos

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Seven things you should know before you buy retail bonds.

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Interest will be payable twice a year on 11 January and 11 July, with the first payment in January 2013. The bonds are not covered by the Financial Services Compensation Scheme (FSCS) in other words, this isn't like sticking your money in a bank account.

Remember, no tax will be deducted from interest payments, but you may still have a tax liability. The bonds can be held in Individual Savings Accounts (Isa) and Sipps.

So what about the interest rate? The interest you get on the bond will take into account changes in the rate of inflation. In this case, inflation will be based on the RPI measure. Bear with me here I'm going to spell out how this is calculated, because these RPI-linked bonds can sometimes be hard to follow.

Say you buy £2,000 worth or 20 of these bonds, which start trading on 11 July 2012. In January 2013, your first interest payment will be altered to take into account the effect of inflation.

The inflation rate used will be from eight months before the issue date (so the RPI in November 2011 of 238.5) to the rate eight months before the payment date (May 2012, or 242.4).

That's a percentage change of roughly 1.64%. That rate is applied to the coupon payment.

So in January 2013, here's what you'll get: each £100 bond pays a £1.30 annual coupon, so you get 65p (because this is a semi-annual payment you get two a year) per £100.

On top of that 65p, you get the adjustment for inflation. So that's an extra 1.64% of that 65p - that comes out at around 1.07p. So that's a total of 66.07p per £100.

You've got £2,000, so multiply by 20 to get your first payment of just over £13.21.

Here's the formula: £100 x 1.3%/2 x (242.4/238.5) x 20 = £13.21.

This equates to an annualised income return of 1.32%.

If we have a period of deflation, you may get an income return of less than 1.3%.

At the end of ten years in July 2022, the amount you get back will depend on the rate of inflation between November 2011 and November 2021. Assuming that inflation averages 3% per year for the next ten years, this means that for your £2,000 initial investment you will get back:

£2000 x (320.5/238.5) = £2,687.60.

However, it's worth noting that if there was a period of deflation over ten years, Severn Trent cannot pay you back less than the £2,000 you originally invested.

If you do want to sell before the bond matures, then you can sell them through a stockbroker. Be aware that you may end up getting back more or less than you initially invested if you do this.

So are these bonds a buy?

The good thing about bonds is that you always get paid before shareholders do. And Severn Trent is a solid company that is unlikely to go bankrupt.

So if you like that security; like the fact that you should get your £2,000 back; and think that inflation might take off; then these bonds might be worth considering.

That said, you might end up getting a better real rate of return from buying Severn Trent shares. It's impossible to know of course, where the share price will be in 2022, but the real rate of income could be better than the bond. Let me explain.

Severn Trent's current annual dividend is 70.1p per share. Its stated dividend policy is to increase dividends by 3% more than the RPI until March 2015. This would give the stock a dividend of 83.5p at that date. Based on the current share price of 1,625p that equates to a yield on cost of 5.13% or 2% more than the current RPI inflation of 3.1%.

The long-term dividends you can expect from water companies are highly dependent on regulation. The water regulator, OFWAT, sets the amount Severn Trent can charge its customers every five years. It's worth bearing in mind that Severn Trent had to cut its dividend following the last regulatory review in 2010. It's possible that it could be cut again.

But just for argument's sake, lets say that Severn Trent can keep increasing its dividend by an inflation rate of 3% per year after 2015. With assets and revenues heavily linked to RPI this could be possible.

Based on this scenario, you could have a yield on cost of 6.3% in 2022 or 3% more than inflation. If you held the bond, your yield on cost would be 1.75% plus an increase in capital value of £687.60.

Let's assume that you held some Severn Trent shares for the same period as the bond and could sell the shares in ten years' time for the same price you bought them for of 1,625p.

If we then look at the annualised rates of return of the two investments, you would get 4.34% holding the bond and 5.43% holding the shares (assuming a 3% inflation rate).

You can argue that this makes sense you're getting a higher yield with the shares to compensate for the higher risk but in any case, neither return looks that impressive.

So if you are hunting around the utility sector, you might do better to look elsewhere. For example, you could look at the equity of a similar inflation-linked business such as National Grid, which currently offers a prospective dividend yield of 6.2% at its current share price of 657p.