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.
Try 6 free issues of MoneyWeek today
Get unparalleled financial insight, analysis and expert opinion you can profit from.
Start your trial
Sign up for MoneyWeek’s free twice-daily newsletter.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
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.
Latest Videos FromMoneyWeek
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%.
