NS&I says it is cutting the proportion of the total invested amount paid out in prizes from 3.6% to 3.3% a year
Warning for NS&I Premium Bonds holders over problem that’ll ‘only’ get worse
A warning has been issued for anyone with Premium Bonds – because the odds of winning could actually get even WORSE. National Savings and Investments (NS&I) says it is cutting the proportion of the total invested amount paid out in prizes from 3.6% to 3.3% a year with effect from April’s draw.
As a result the odds of winning with each £1 bond number will lengthen – from 22,000-1 to 23,000-1. Michele Teighi, financial expert and founder at investing platform psyfi money, said: “Premium Bonds don’t offer a guaranteed return on investment.”
He added: “This might convince some people to cash in their Premium Bonds for a more consistent investment, such as a cash ISA.” However, Mr Tieghi warned that if you have a small amount invested, your odds of wining are “quite low” and with the April changes will “only decrease further”.
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He said: “It’s important to remember that each monthly draw is completely independent, so even if you’ve had some recent wins, this doesn’t change future odds.
“Winning is great, but it doesn’t increase your chances going forward; it shouldn’t influence your decision.” Mr Tieghi said with the rate cut just weeks away, now is a good time to think about diversifying your savings.
He said: “Your chances of winning decrease from April. So, cashing in at the end of March, and investing in an alternative method which will offer you a greater return on investment would be beneficial.
“Consider switching your money from Premium Bonds to a Cash ISA with an interest rate above 3.3 per cent. As youll be earning guaranteed income each month, while statistically earning more than what you would expect to earn if you kept your money in Premium Bonds.”
When you buy premium bonds, you are entered into a monthly prize draw in which you can win between £25 and £1m tax-free.
But while you could strike it lucky and scoop a life-changing sum, there is no guarantee you will win anything at all.