While National Savings & Investments (NS&I) does not pay an interest rate like savings accounts do, the rate determines the number of prizes that get dished out each month.
And this month, National Savings & Investments (NS&I) is raising its Premium Bond prize fund rate from 3.7% to 4%, taking the chances of winning a prize to a 15-year high. The increase comes hot off the heels of a rate rise just last month from 3.3% to 3.7%.
The rate rise means that from August, the odds are improving to 22,000 from 24,000 to one. Each £1 bond will have its highest chance of winning in nearly 15 years.
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This is the seventh time the Premium Bond prize fund rate has increased in over a year as the Treasury-backed savings vehicle competes with rising rates on savings accounts, which have been climbing as the Bank of England hikes interest rates.
How many NS&I prizes are there?
NS&I said it estimates the changes will see an extra £30m added to the prize fund from August, and there will be 460,000 extra prizes.
The estimated number of £1m prizes will remain at two, but there will be an estimated 77 £100,000 prizes in August, from 71 in July.
The number of £50,000 prizes will also jump to 154 from 141 in July.
Should you buy Premium Bonds?
Premium Bonds are popular savings products, but it’s worth noting the 4% rate does not mean that that’s the return you get on your investment.
With a savings rate, you’re guaranteed that interest on your cash. The prize fund rate represents how likely someone with average luck is to win a prize.
The rates on savings accounts are heating up again following the Bank of England’s latest base rate hike.
The best easy access savings account, from RCI Bank, currently offers 4.2% – and that is a guaranteed return on your money.
And if you’re ready to lock your money up for twelve months, the best one-year fixed savings account, from My Community Bank, offers 6.03%.
Nic studied for a BA in journalism at Cardiff University, and has an MA in magazine journalism from City University. She joined MoneyWeek in 2019.
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