You may want to revisit your savings plans
The Premium Bonds prize draw takes place at the start of each month(Image: Getty)
Premium Bonds holders are being urged to review their accounts as NS&I makes significant changes to the savings scheme’s rules. In welcome news for savers, NS&I has confirmed it will boost both the Premium Bonds prize fund rate and the chances of winning. The provider is also lifting its rates across several other accounts.
The Government-backed institution has said that from July’s draw, the Premium Bonds prize fund rate will climb from its current 3.3 per cent to 3.8 per cent. The winning odds for each £1 Bond will also improve from July, shifting from 23,000 to one to 22,000 to one.
This marks a fast turnaround for savers, as NS&I previously slashed the prize rate from 3.6 per cent to 3.3 per cent in April’s draw. The winning odds were similarly reduced in April, dropping from 22,000 to one to 23,000 to one.
The prize fund rate was trimmed three times during 2025. Sarah Coles, head of personal finance at wealth firm AJ Bell, said it’s about time NS&I upped its rates.
She said: “It was starting to get a bit embarrassing for NS&I to have fallen quite so far behind the more competitive accounts in the easy access market. Cuts in April meant Premium Bonds were paying a prize rate of just 3.3 per cent, where easy access savers can get their hands on more than 10 accounts without restrictions on withdrawals paying over 4 per cent.
“The rise in the prize rate, and the increases to its other easy access products is NS&I playing catch up with the wider market. It did the same with its fixed rate accounts at the end of April and has finally bitten the bullet with its easy access products.”
Could the prize fund rate go up again?
The savings expert was asked whether NS&I might raise the rate further in the month’s ahead. Ms Coles responded: “What happens next for Premium Bonds will depend on the wider world.
“War in Iran and the resulting rise in the oil price means we could see more inflation.” She said: “This could keep interest rates higher for longer, which in turn would keep easy access rates higher.
“At the moment, the market is pricing in two more rate rises during the rest of 2026 – and possibly even a third. Each rise is likely to push the easy access market higher – including Premium Bonds. It means this might not be the end of the prize rate rises.”
Rachel Springall, finance expert at comparison website Moneyfactscompare.co.uk, welcomed the development for bondholders, with their improved odds of securing a prize. She said: “These products are a great option for savers who want the chance to win big, or to even open them as a gift.”
She also highlighted: “It’s worth pointing out that the prize fund rate is now back to where it was last year, as it was 3.80 per cent in April 2025. It rises and falls to adjust to the net financing targets and, of course, considers wider interest rate moves.”
Are Premium Bonds suitable for your savings needs?
Premium Bonds remain a favourite among savers, with the tantalising possibility of striking it lucky in the monthly prize draw. Winners can pocket substantial sums, with monthly prizes including £100,000, £50,000, or even the coveted £1million jackpot.
However, the odds of winning are slim, and the majority of prizes are for small amounts such as £25 or £50. Ms Coles cautioned that this savings product might not be appropriate for everyone.
She explained: “There will always be people drawn to Premium Bonds because of the vanishingly small chance of winning a life-changing sum of money, and for them the prize rate rising is a nice-to-have on a product they’re already committed to. However, if you have this money set aside for the long term, you need to bear in mind that in an average month, someone with average luck will still win nothing, so there’s a real risk of your money losing spending power after inflation.”
Other NS&I rate changes
NS&I has also announced it is boosting rates across four of its other savings products. The updated rates came into force from May 14.
These include:
- Direct Saver – 3.45 per cent (up from 3.05 per cent)
- Income Bonds – 3.4 per cent (up from 3.01 per cent)
- Direct ISA – 3.8 per cent (up from 3.5 per cent)
- Junior ISA – 3.7 per cent (up from 3.55 per cent).