NS&I hikes Premium Bond prize rate again to hit the highest level in 15 years

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. 

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues 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

Sign up

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%.