NS&I is increasing the Premium Bonds prize fund rate from 3.3% to 3.8% starting with the July draw, while also improving the odds of winning from 23,000-to-1 to 22,000-to-1. The changes are part of a broader update to NS&I's savings products, including higher rates on fixed-term British Savings Bonds and Green Savings Bonds.
Prize Fund Boost and Odds Improvement
The prize fund rate increase means more money is available for monthly prizes, with top prizes including £50,000, £100,000, and the £1 million jackpot. The odds of winning for each £1 Bond will improve to 22,000-to-1, up from 23,000-to-1. These changes take effect from the July draw.
George Sweeney, investing expert at comparison site Finder, commented: "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."
NS&I's Unique Position in the Savings Market
Sweeney explained that NS&I operates differently from other savings institutions because its primary goal is to raise funds for the Government. "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," he said.
NS&I is a state-run institution with a net financing target of £15 billion for the 2026/2027 tax year. The Green Savings Bonds, launched in 2021 to fund green government projects, are not subject to this financing target.
Future Rate Changes Possible
Looking ahead, Sweeney noted that the trajectory of Bank of England interest rates will influence NS&I's decisions. "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," he said. However, he cautioned that if NS&I raises funds faster than expected, increasing the prize fund rate could hinder its mandate of raising money without overshooting.
New Interest Rates on NS&I Bonds
As announced on June 23, the following new rates are now available on NS&I fixed-term bonds:
- Guaranteed Growth Bonds 1-year: 4.69% (up from 4.5%)
- Guaranteed Income Bonds 1-year: 4.69% (up from 4.5%)
- Guaranteed Growth Bonds 2-year: 4.67% (up from 4.48%)
- Guaranteed Income Bonds 2-year: 4.67% (up from 4.48%)
- Guaranteed Growth Bonds 3-year: 4.65% (up from 4.45%)
- Guaranteed Income Bonds 3-year: 4.69% (up from 4.45%)
- Guaranteed Growth Bonds 5-year: 4.55% (up from 4.40%)
- Guaranteed Income Bonds 5-year: 4.55% (up from 4.40%)
- Green Savings Bonds 3-year: 4.45% (up from 3.82%)
These rate increases make NS&I products more attractive to savers, particularly as the Premium Bonds prize fund rate rises and odds improve.
