You can win big prizes in the monthly Premium Bonds draw (Image: Getty)
Premium Bonds may want to look over their savings plans as NS&I has announced some key changes. The update comes as major changes to Premium Bonds are coming in from the July draw.
In a previously announced boost for Bond holders, NS&I is lifting the prize fund rate for Premium Bonds from the current 3.3 per cent up to 3.8 percent from July. The odds of each £1 Bond bagging a prize are also moving upwards, from one in 23,000 to one in 22,000.
You can win big prizes in the monthly Premium Bonds draw, including large amounts such as £100,000, £50,000 or even a £1million jackpot. There are always two £1million prizes each month.
Account changes
The provider has now announced new issues of its British Savings Bonds, with increased rates. The group has also upped the rate for its Green Savings Bond.
Andrew Westhead, NS&I retail director, said: “We regularly review our products to ensure they reflect current market conditions, and today’s [June 23] increases respond to changes in the fixed-term savings market. Our fixed-rate bonds offer savers the choice of different term lengths with the certainty of knowing the interest rate they will receive over the full term, alongside the reassurance that all money invested with NS&I is 100 per cent secure, backed by HM Treasury.”
Fundraising targets
Given the savings boost, Premium Bonds holders may ask if they will be getting some good news soon as well. Sarah Coles, head of personal finance at investment platform AJ Bell, said: “This change will inevitably raise the question of whether it means the Premium Bond prize rate is set for a boost too.
“The good news is that it’s already set to rise in July – which was announced last month. The bad news is that NS&I might decide this is enough to retain its customers at a time when the next interest rate movement is expected to be downwards.
“It will still need to hit its funding targets, but is likely to have an eye on how successful this round of hikes is before it considers another rise for its flagship savings product.”
She was asked how much the rate could move over the months ahead, given the uptick in July. The July boost comes just months after NS&I cut the prize rate from 3.6 per cent to 3.3 per cent, from the April draw.
Ms Coles said: “The current prize rate is 3.3 per cent and is set to rise to 3.8 per cent in July. This is quite a notable jump, so we wouldn’t usually expect another significant move soon, unless there are some big shifts in the broader market.
“On balance it seems likely that the next move might be downwards given the forecast for interest rates, but it’s impossible to be sure given the uncertainty in the wider world right now.”
The odds of winning may follow a different trajectory. Ms Coles said: “The odds will move from 23,000 to one to 22,000 to one in July, but in the past the odds haven’t always changed when the prize rate changes. NS&I is able to keep the odds steady by changing the mix of different prizes.”
The expert reminded Bond holders that even with any changes, your chances of bagging a big prize will probably stay pretty slim. Ms Coles said: “Of course, these things are both very different to the return you’ll actually receive.
“In an average month, the average Bond holder will still win nothing. And because there’s no interest on these accounts, unless you are unusually lucky, there’s a real risk you will lose money after inflation. It means it’s worth thinking carefully whether these Bonds are the right home for your money.”
New interest rates
These are the new bond issues from NS&I:
- Guaranteed Growth Bonds 1-year – 4.69 per cent (up from 4.5 per cent)
- Guaranteed Income Bonds 1-year – 4.69 per cent (up from 4.5 per cent)
- Guaranteed Growth Bonds 2-year – 4.67 per cent (up from 4.48 per cent)
- Guaranteed Income Bonds 2-year – 4.67 per cent (up from 4.48 per cent)
- Guaranteed Growth Bonds 3-year – 4.65 per cent (up from 4.45 per cent)
- Guaranteed Income Bonds 3-year – 4.69 per cent (up from 4.45 per cent)
- Guaranteed Growth Bonds 5-year – 4.55 per cent (up from 4.40 per cent)
- Guaranteed Income Bonds 5-year – 4.55 per cent (up from 4.40 per cent)
- Green Savings Bonds 3-year – 4.45 per cent (up from 3.82 per cent).