Premium Bonds prize fund rate and chances of winning slashed

Young woman looking at bills — (Image credit: seksan Mongkhonkhamsao via Getty Images)

Premium Bonds are set to provide lower average returns as National Savings and Investment (NS&I) will cut the prize fund rate and reduce the chances of winning in the monthly prize draw.

From the April Premium Bonds prize draw onwards, the prize fund rate, which represents the rate of return for a bondholder with average luck, will be slashed from 3.6% to 3.3%.

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The number of prizes available is set to fall in almost every denomination. However, the number of £25 prizes up for grabs will increase from 2,643,007 to an estimated 2,806,003 in April, while the number of £1 million prizes will remain at two a month.

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Value of prizes	Number and total value of prizes in February 2026	Expected number and total value of prizes in April 2026 (estimate)
£1,000,000	2	2
£100,000	78	71
£50,000	154	143
£25,000	311	284
£10,000	777	712
£5,000	1,553	1,424
£1,000	16,322	15,035
£500	48,966	45,105
£100	1,735,948	1,537,125
£50	1,735,948	1,537,125
£25	2,643,007	2,806,003
Total:	6,183,066	5,943,029

Source: NS&I, 24 February

What is the Premium Bonds prize fund rate?

The Premium Bonds prize fund rate is an unusual measurement for the returns you may get on your savings.

Unlike a traditional interest rate which tells you how much guaranteed growth your savings will achieve in a year, the prize fund rate only tells you how much growth the savings of someone with average luck can expect from Premium Bonds prizes in a year.

As prizes are distributed entirely at random, savers will achieve higher and lower average returns than the prize fund rate.

NS&I uses the prize fund rate as a benchmark to determine how many prizes should be given away each month, and what size they should be. When it goes down, they will reduce the total amount of money paid out in a draw.

Are Premium Bonds still worth it?

With the chances of winning going down and the prize fund rate being slashed, the question of whether Premium Bonds are still worth it is raised.

Mark Hicks, director of active savings at Hargreaves Lansdown, said the prize fund rate cut “serves as a timely reminder as to whether you can get more for your money elsewhere.

“Premium Bonds don’t pay out interest – their prize rate is more of a benchmark of average return for your money. However, the reality is that, if you don’t win anything, you don’t get anything at all. It’s well worth looking at the wider savings market to see what deals are available.”

Most savers with average luck who have not used up their entire ISA allowance could get higher, and much more predictable, returns by putting their cash into one of the top cash ISAs on the market, paying up to 4.32%.

Money that grows within an ISA is also protected from tax, just like winnings from Premium Bonds, meaning you are not exposed to any extra tax liability.

If you have used up your full ISA allowance, then putting money in Premium Bonds may make more sense, but research shows that winnings are heavily skewed in favour of wealthier people as the more money you hold in the savings vehicle, the more likely you are to win.

A Freedom of Information request sent to NS&I by AJ Bell in April 2025 found that around 63% of Premium Bonds holders have never won a single penny from the monthly prize draws.

It also found that while the average holding for those who have never won a prize was just £106.79, the average holding for a winner was £23,397.

With the chances of winning reducing, and the total prize pot being slashed, Premium Bonds are set to become a much less competitive product in the savings market.

This being said, there are still some situations where putting your money in Premium Bonds could be worth it.

As mentioned above, if you have used up your entire ISA allowance and still have a lot of cash left over, putting it in Premium Bonds could be a good way to let it grow without having to pay any tax.

The caveat here is that this is probably only worth it if you have a truly significant amount of money sitting around.

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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. He previously worked at The Economist in their Audience team and read history at Emmanuel College, Cambridge, specialising in the history of political thought.

In his free time, he likes reading, walking around Hampstead Heath, and cooking overambitious meals.