Premium Bonds rules change warning as expert predicts ‘two more rises’

You may want to revisit your savings plans

Premium Bonds holders want wish to review their accounts. NS&I has announced some significant changes to the savings scheme. In welcome news for customers, NS&I has confirmed it will boost the Premium Bonds prize fund rate alongside improved odds of winning.

The provider is also raising the rates on a number of its other accounts. The state-run bank has announced that from the July draw, the prize fund rate for Premium Bonds will increase from the current 3.3 per cent to 3.8 per cent.

The odds of winning for each £1 Bond will also improve from July, rising from 23,000 to one to 22,000 to one. This marks a swift turnaround for savers, given that NS&I slashed the prize rate from 3.6 per cent to 3.3 per cent from the April draw. The odds of winning were similarly reduced from the April draw, dropping from 22,000 to one to 23,000 to one.

There were three reductions to the prize fund rate in 2025. Sarah Coles, head of personal finance at wealth firm AJ Bell, said it’s long overdue that NS&I improved 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?

Ms Coles was asked whether NS&I might increase the rate again over the coming months. She said: “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.

“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 site Moneyfactscompare.co.uk, said it’s welcome news for Bond holders that their chances of winning have improved. She explained: “These products are a great option for savers who want the chance to win big, or to even open them as a gift.

“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 the right choice for you?

Premium Bonds remain a firm favourite among savers, with the allure of a substantial windfall in the monthly prize draw. There are considerable sums up for grabs each month, with prizes including £100,000, £50,000 or even a £1million jackpot.

However, the odds of winning are slim, and the majority of prizes are modest amounts such as £25 or £50. Ms Coles suggested the savings scheme may not be suitable for everybody.

She said: “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 increases

NS&I has also told customers it is raising the rates across four of its savings accounts. The revised rates came into effect 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).