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:
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- 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.
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|
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.
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