Premium Bonds are a savings product, but instead of getting a set rate of interest back on your money, you are entered into a monthly prize draw
Martin Lewis is founder of MoneySavingExpert.com(Image: ITV)
Martin Lewis’ MoneySavingExpert.com (MSE) team has explained if Premium Bonds are still “worth it” after NS&I announced another cut to its prize fund rate.
Premium Bonds are a savings product, but instead of getting a set rate of interest back on your money, you are entered into a monthly prize draw.
The smallest monthly prize is £25, and the biggest is £1million. However, winning a prize every month isn’t guaranteed – and there are far more smaller prizes given out, compared to the bigger sums.
There are usually thousands of £25 prizes given out and just two £1million prizes. In an update this week, NS&I confirmed it is reduced its Premium Bonds prize fund rate from 3.6% to 3.3% from its April 2026 draw.
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The prize fund rate is the nearest thing Premium Bonds has to an interest rate. The odds of any single bond winning a prize are also dropping from 1 in 22,000 to 1 in 23,000.
Martin Lewis’ MSE team has explained that the latest rate cut makes Premium Bonds “even easier to beat elsewhere”.
They explained that most people with typical luck won’t get a return of 3.6%, or 3.3%, even if they had the maximum £50,000 invested.
In an article posted on the MSE website, the team said: “For most savers with average luck, accounts that pay interest will now be even more likely to beat Premium Bonds.
“This is because savings interest is a guaranteed return – so if you get today’s top easy-access rate of 4.5%, you’d get £45 in interest a year for every £1,000 saved.
“Though this interest rate can go up and down over time, you know exactly what you’ll earn at any given point – so it still provides more certainty than Premium Bonds, where many saving the same £1,000 would win nothing.”
MSE explained that most people are likely to get less than the prize fund rate – and even less chance of winning the top £1million.
MSE finishing by saying: “If you know and accept this, then investing in Premium Bonds isn’t a bad plan.”