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NS&I cuts Premium Bonds prize fund rate – what does it mean for savers?
NS&I will pay out less money in the Premium Bonds prize draw when the cut comes into effect
NS&I has announced the Premium Bonds prize fund rate will be cut, meaning fewer large prizes will be paid out.
The prize fund rate will be slashed by 20 basis points in August from 3.8% to 3.6%.
The odds of winning will remain the same, at 22,000 to 1 for every £1 bond, but savers with average luck can expect to see smaller returns on their money.
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In August, the estimated total number of prizes will be 6,011,195, marginally higher than the 5,974,465 prizes paid out in the most recent Premium Bonds prize draw in June.
The number of high value prizes will be cut, although there will be more of the smallest payouts, £25, up for grabs.
The number of overnight millionaires made every month will remain the same as two lucky Premium Bonds winners will still receive a visit from Agent Million.
A table showing the number and total value of prizes in June compared to the expected figures in August can be found below.
Swipe to scroll horizontally
Value of prizes
Number and total value of prizes in June 2025
Number and total value of prizes in August 2025 (estimate)
£1,000,000
2
2
£100,000
79
75
£50,000
159
151
£25,000
317
302
£10,000
792
754
£5,000
1,585
1,507
£1,000
16,649
15,869
£500
49,947
47,607
£100
1,853,552
1,687,680
£50
1,853,552
1,687,680
£25
2,197,831
2,569,568
Total:
5,974,465
£416,221,075
6,011,195
£396,738,700
Source: NS&I
The upcoming change will be the fifth cut since September 2023, when it stood at a recent high of 4.65%
The prize fund rate was reduced to 3.8% in April 2025.
Greig Bingham, head of financial modelling at Broadstone, said the cut “will be disappointing for savers” as they become less likely to win a prize bigger than the minimum £25.
He added: “As interest rates fall, people will need to work harder to put their cash to work and earn attractive returns.”
Meanwhile, Andrew Westhead, NS&I retail director, said the cut “reflects the changing landscape for savings”.
He added: “By making this adjustment now, we’re able to continue to balance the interests of savers, taxpayers and the stability of the broader financial services sector.”
What is the Premium Bonds prize fund rate?
The Premium Bonds prize fund rate is the benchmark used by the NS&I to determine how many prizes should be given away every month and what size they should be.
The new figure of 3.6% in August will represent the average rate of returns on cash invested in Premium Bonds for someone with average luck.
While the prize fund rate will fall to 3.6%, you are not necessarily guaranteed to achieve that as an annual rate of return. Many people who buy Premium Bonds will receive lower annual returns, and some will receive higher returns.
Are Premium Bonds still worth it?
The cut in the prize fund rate will prompt questions over whether keeping money in Premium Bonds is the best way to grow your savings.
Though the unique appeal of Premium Bonds is that you do not have to pay any tax on your winnings, alongside the novelty of the monthly prize draw, you could potentially see better growth by putting your money in the best savings accounts for high interest rates.
For example, the best cash ISA on the market right now from Plum pays an interest rate of 4.85%. As the savings account is an ISA, savers who are yet to use their £20,000 ISA allowance will not have to pay any tax on interest received.
The best regular savings account on the market right now, from Chase, pays out 5%. It beats NS&I’s prize fund rate, though the interest is taxable. Savers may be able to benefit from tax-free savings allowances.
A significant disparity was also found between people who have a lot of their cash invested in Premium Bonds and those who have less.
The average holding for Premium Bonds winners was £23,397, compared to the average holding for all holders of £5,406.
With yet another cut made to the prize fund rate, it may be a good idea for savers to shop around and see whether they can make their money work harder by putting it in alternative savings accounts.
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Daniel is a financial journalist at MoneyWeek, writing about personal finance, economics, property, politics, and investing.
He covers savings, political news and enjoys translating economic data into simple English, and explaining what it means for your wallet.
Daniel joined MoneyWeek in January 2025 and previously worked at The Economist in their Audience team. He read history at Emmanuel College, Cambridge and edited Cambridge's student newspaper, Varsity.
In his free time, he likes reading, walking around Hampstead Heath, and cooking overambitious meals.
