Premium Bond holders are set to see the prize fund rate drop from a historic high of 4.65% to 4.4% on 1 March, meaning an estimated 73,000 fewer prizes will be on offer.
The prize fund rate has stood at its highest level since 1999 from September 2023, when National Savings & Investments (NS&I) increased it from 4% to 4.65% for Premium Bond holders.
The decision mirrors activity in the savings market overall as we have seen rates falling in the past four months.
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However, compared with a year ago, “the prize fund rate was 3.30% and the odds were 24,000 to 1,” says Andrew Westhead, retail director at NS&I.
Justifying the drop, Westhead adds: “In a dynamic savings market, it’s important that our rates are set at an appropriate position against those of our competitors.”
We look into what the new fund rate will mean for your Premium Bonds, how many fewer prizes could be on offer and whether the rate will continue on a downward trend.
How many prizes will be on offer in the March draw?
The NS&I prize fund rate is used as a benchmark to set how many prizes should be given away every month for each value- ranging from £25 prizes to £1 million.
As a result of the prize fund rate falling from 1 March, the number of prizes on offer will also dip.
NS&I confirms that the March draw is expected to pay out “over 5.7 million tax-free prizes totalling more than £444 million to savers across the UK.”
This compares with the latest February 2024 draw which saw more than 5.8 million prizes worth more than £475 million.
Here’s how the February 2024 prizes compare to how the March draw could be distributed, according to NS&I.
| Value of prizes | Number and total value of prizes in February 2024 | Number and total value of prizes in March 2024 (estimate by NS&I) | Difference in number of prizes from February to March 2024 |
|---|---|---|---|
| £1,000,000 | 2 | 2 | 0 |
| £100,000 | 91 | 85 | -6 |
| £50,000 | 182 | 170 | -12 |
| £25,000 | 365 | 339 | -26 |
| £10,000 | 912 | 848 | -64 |
| £5,000 | 1,823 | 1,697 | -126 |
| £1,000 | 19,024 | 17,775 | -1,249 |
| £500 | 57,072 | 53,325 | -3,747 |
| £100 | 2,363,595 | 2,130,923 | -232,672 |
| £50 | 2,363,595 | 2,130,923 | -232,672 |
| £25 | 1,038,003 | 1,425,338 | +387,335 |
| Total | 5,844,664 prizes worth £475,609,325 | 5,771,425 prizes worth £444,399,400 | -73,239 |
Nearly all prize values will see a drop in the number of prizes on offer from March, with £100 and £50 prizes seeing the biggest cut.
£25 prizes will see a significant increase of more than 387,000 on offer from March.
Whilst the fund rate is set to fall, NS&I has confirmed it is keeping the odds of winning the same- 21,000 to 1 for every £1 Bond.
Will more cuts follow from NS&I?
It might come as a shock to savers, as after six months of raking in a record-high fund rate of 4.65%, the rate will fall by 0.25% from 1 March.
Although the cut follows the overarching movement of falling rates on easy-access and fixed savings accounts, experts believe the new prize fund rate is due to NS&I’s previous success with its market-leading 6.2% one-year fixed bond last summer.
Despite the product being pulled within five weeks on the market due to high demand, the savings product hugely contributed to NS&I reaching its £7.5 billion fundraising target for 2023/24 in six months.
The fundraising target is set by the Treasury to increase government funds, which has to remain competitive with the rest of the savings market.
As a result, the government-backed savings provider can now take its foot off the pedal and Myron Jobson, senior personal finance analyst at interactive investor warns: “Savers might need to brace themselves for less generous offerings from the NS&I going forward.”
This could be a good time for Premium Bond holders to shop around as we have seen competition heat up again in the savings market, which might not last for long.
You can currently earn up to 5.25% on a one-year fixed saver (matching the Bank of England’s base rate and beating inflation), and get up to 5.2% on an easy-access saver.
Read more on our Premium Bond alternatives to make your money go further.
How to get unclaimed Premium Bond prizes
With the fund rate falling from March, now is also a good time to check if you have any unclaimed Premium Bonds.
As of today (27 February), NS&I has told MoneyWeek there is a total of 2,375,726 Premium Bonds worth £82,288,675.
London is the region with the most unclaimed prizes- 350,091 worth £12,326,925. The South East of England follows with 346,549 unclaimed prizes worth £11,660,125.
To check for unclaimed Premium Bonds, you can call NS&I for free on 08085 007 007- but you must be registered for online or phone services with NS&I.
Alternatively, you can write a letter to NS&I with the following details:
- Your Premium Bond holder number
- Your current name
- Any previous names
- Your current address
- Any previous addresses
- Your signature
The letter can be addressed to: NS&I, Sunderland SR43 2SB.
Any unclaimed prizes will be sent to your home address, so if you have moved house recently, make sure your details are up to date with NS&I.
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