NS&I bumps up interest rate on Premium Bonds again
NS&I is increasing the Premium Bond prize rate for the second time this year, meaning there are hundreds of extra prizes in every draw. We look at how the changes will affect you.
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:
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
- 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
Value of prizes in January 2023 | Number of prizes in January 2023 | Value of prizes in February 2023 (estimated) | Number of prizes in February 2023 (estimated) |
£1,000,000 | 2 | £1,000,000 | 2 |
£100,000 | 56 | £100,000 | 59 |
£50,000 | 111 | £50,000 | 117 |
£25,000 | 224 | £25,000 | 236 |
£10,000 | 559 | £10,000 | 590 |
£5,000 | 1,116 | £5,000 | 1,177 |
£1,000 | 11,968 | £1,000 | 12,573 |
£500 | 35,904 | £500 | 37,719 |
£100 | 1,159,432 | £100 | 1,280,509 |
£50 | 1,159,432 | £50 | 1,280,509 |
£25 | 2,617,902 | £25 | 2,376,161 |
Total: £299,202,350 | Total: £4,986,706 | Total: £314,347,875 | Total: £4,989,652 |
Source: NS&I
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
Kalpana is an award-winning journalist with extensive experience in financial journalism. She is also the author of Invest Now: The Simple Guide to Boosting Your Finances (Heligo) and children's money book Get to Know Money (DK Books).
Her work includes writing for a number of media outlets, from national papers, magazines to books.
She has written for national papers and well-known women’s lifestyle and luxury titles. She was finance editor for Cosmopolitan, Good Housekeeping, Red and Prima.
She started her career at the Financial Times group, covering pensions and investments.
As a money expert, Kalpana is a regular guest on TV and radio – appearances include BBC One’s Morning Live, ITV’s Eat Well, Save Well, Sky News and more. She was also the resident money expert for the BBC Money 101 podcast .
Kalpana writes a monthly money column for Ideal Home and a weekly one for Woman magazine, alongside a monthly 'Ask Kalpana' column for Woman magazine.
Kalpana also often speaks at events. She is passionate about helping people be better with their money; her particular passion is to educate more people about getting started with investing the right way and promoting financial education.
-
How ‘Bed & ISA’ could save you £15,000 over a decade
Moving your investments into a tax-free wrapper through ‘Bed & ISA’ transactions could save you thousands over the long run by cutting your tax bill
By Katie Williams Published
-
House prices hit record high, says Halifax
UK house prices rose 3.9% over the past year, with a typical property now costing £293,999. We look at which regions are seeing the strongest growth, and whether the rally in house prices will continue next year
By Ruth Emery 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
-
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
-
How 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 Vaishali Varu Last updated
-
John Lewis mulls buy now, pay later scheme
The CEO of John Lewis has said the retailer will consider introducing buy now, pay later initiatives for lower-priced items.
By Pedro Gonçalves Published
-
State pension triple lock at risk as cost balloons
The cost of the state pension triple lock could be far higher than expected due to record wage growth. Will the government keep the policy in place in 2024?
By Nicole García Mérida Last updated
-
Paragon raises rate on one-year fixed cash ISA to 5.75%
Paragon Bank ups its one-year fixed cash ISA rate to 5.75% - is it enough to top the table?
By Vaishali Varu Published