Key changes to Premium Bonds are coming in over the summer
With the Premium Bonds prize rate set to move up very soon, customers may well ask the question whether more positive news from NS&I could be on the horizon. The monthly prize draw offers the chance to pocket substantial sums, with prizes ranging from £50,000 or £100,000, right up to a life-changing £1million jackpot.
From July, both the likelihood of winning and the overall prize fund are set to improve. NS&I has confirmed it will increase the prize fund rate for the July draw, jumping from 3.3 per cent to 3.8 per cent.
The odds of winning for each £1 Bond are also improving, shifting from 23,000 to one down to 22,000 to one. In more recent good news for NS&I customers, the savings provider has also announced rate increases across its fixed term British Savings Bonds and its Green Saving Bond. Given the upward trajectory of NS&I products, savers may be hopeful that more prize fund rate hikes could be on the cards.
‘Future changes’
George Sweeney, investing expert at comparison site Finder, said predicting future changes is not easy. He said: “We could also see some future changes to the underlying prize rate for Premium Bonds, which are already due to rise from 3.3 per cent to 3.8 per cent for the July draw and beyond.
“The Bank of England (BoE) base rate decisions will have some influence; however, it’s not an exact science. The reason being, NS&I operates slightly outside the rest of the savings market due to its unique underlying goal of raising funds for the Government, instead of simply trying to make a profit or compete with other saving institutions.”
NS&I is a state-run institution and is given net financing targets by the Government to earn cash for the Treasury. Its target currently stands at £15billion for the 2026/2027 tax year.
It is worth noting that the Green Savings Bonds are not subject to this financing target. These products were introduced in 2021 to help finance green Government projects throughout the UK.
‘More enticing’ rates
Looking at what could influence NS&I’s decision on setting the Premium Bonds rate, Mr Sweeney said: “If the Bank of England interest rate landscape looks like we’ll stay higher for longer, it’s more likely we’ll see more enticing Premium Bond prize fund rates later in the year.
“But, it all depends on how the current strategy progresses, because if NS&I raise funds at a faster rate than expected, lifting the prize fund rates for Premium Bonds would actually hinder rather than help it achieve its mandate of raising money, but not too much.”
Full list of new interest rates
NS&I announced the latest rate increases on June 23. These included:
- 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).
