NS&I Premium Bond prize fund rate jumps to 3.3%
NS&I is hiking its prize fund rate again, marking the fifth rise in a year. We look at how the changes will affect you.
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:
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
- 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).
Value of prizes | Number of prizes in February 2023 | Number of prizes in March 2023 |
£1,000,000 | 2 | 2 |
£100,000 | 59 | 62 |
£100,000 | 59 | 62 |
£100,000 | 59 | 62 |
£50,000 | 117 | 123 |
£25,000 | 236 | 248 |
£10,000 | 590 | 620 |
£5,000 | 1,177 | 1,236 |
£1,000 | 12,573 | 13,173 |
£500 | 37,719 | 39,519 |
£100 | 1,280,509 | 1,400,876 |
£50 | 1,280,509 | 1,400,876 |
£25 | 2,376,161 | 2,132,917 |
Total£314,347,875 | Total4,989,652 | Total4,989,652 |
Source: NS&I
Ruth is passionate about helping people feel more confident about their finances. She was previously editor of Times Money Mentor, and prior to that was deputy Money editor at The Sunday Times.
A multi-award winning journalist, Ruth started her career on a pensions magazine at the FT Group, and has also worked at Money Observer and Money Advice Service.
Outside of work, she is a mum to two young children, a magistrate and an NHS volunteer.
-
Barclays warns of significant rise in social media investment scams
Investment scam victims are losing an average £14k, with 61% of those falling for one over social media. Here's how to spot one and keep your money safe
By Oojal Dhanjal Published
-
Over a thousand savings accounts now offer inflation-busting rates – how long will they stick around?
The rate of UK inflation slowed again in March, boosting the opportunity for savers to earn real returns on cash in the bank. But you will need to act fast to secure the best deals.
By Katie Williams Published
-
Act now to bag NatWest-owned Ulster Bank's 5.2% easy access savings account
Ulster Bank is offering savers the chance to earn 5.2% on their cash savings, but you need to act fast as easy access rates are falling. We have all the details
By Marc Shoffman Last updated
-
Moneybox raises market-leading cash ISA to 5%
Savings and investing app MoneyBox has boosted the rate on its cash ISA again, hiking it from 4.75% to 5% making it one of top rates. We have all the details.
By Ruth Emery Published
-
October NS&I Premium Bonds winners - check now to see what you won
NS&I Premium Bonds holders can check now to see if they have won a prize this month. We explain how to check your premium bonds
By Kalpana Fitzpatrick Published
-
October’s NS&I Premium Bond winners revealed - have you scooped £1 million?
Two lucky NS&I Premium Bond winners are now millionaires this October. Find out here you are one of them
By Kalpana Fitzpatrick Published
-
The best packaged bank accounts
Advice Packaged bank accounts can offer great value with useful additional perks – but get it wrong and you could be out of pocket
By Tom Higgins Last updated
-
Bank of Baroda closes doors to UK retail banking
After almost 70 years of operating in the UK, one of India’s largest bank is shutting up shop in the UK retail banking market. We explain everything you need to know if you have savings or a current account with Bank of Baroda
By Vaishali Varu Published
-
The best options to earn cashback on spending
From credit cards and current accounts to cashback websites, there are plenty of ways to earn cashback on the money you spend.
By John Fitzsimons Published
-
Should you retire abroad?
Check the regulations governing pension savings carefully before you decide to retire abroad.
By David Prosser Published