More big-money prizes added to Premium Bonds from July

Premium Bonds holders will have more chances to win big-money prizes from July.

The Premium Bonds prize fund rate will reach a 15-year high from the July prize draw, increasing to 3.70% from 3.30%.

Savings giant NS&I, which made the announcement, said the changes will see an additional £39 million in prizes available for bondholders.

The odds of each £1 Premium Bond winning a prize will remain at 24,000 to one, but people will have more chances each month to win prizes worth between £50 and £100,000.

The estimated number of smaller, £25 prizes will reduce in July.

Among the changes, NS&I estimates there will be 71 £100,000 prizes in July, up from 63 in June.

An estimated 141 £50,000 prizes will be up for grabs, up from 125 in June.

And around 284 £25,000 prizes are expected to be on offer, up from 252 in June.

The estimated number of £1 million prizes will remain the same, at two.

NS&I, which is backed by the Treasury, has a duty to balance the interests of savers, taxpayers and the broader financial services sector.

The changes will ensure that NS&I’s products are priced appropriately when compared to the rest of the savings market, the savings giant said.

Savings rates have been edging up generally as the Bank of England base rate has increased.

NS&I chief executive Dax Harkins said: “This is now the sixth prize fund rate increase for Premium Bonds in just over a year, making it the highest it’s been in over 15 years.

“With the changes, we’re expecting to pay out more than £374 million to winners in July with more higher-value prizes, meaning that, each month, more lives will be changed by Premium Bonds.”

NS&I has also increased the interest rate for young savers holding its Junior Isa from Tuesday, with the rate increasing to 3.65% from 3.40%.

More than 89,000 savers aged under 18 will benefit, it said.

Laura Suter, head of personal finance at AJ Bell, said: “While the news of further interest rate hikes from the Bank of England has been terrible for homeowners and the mortgage market, savers are having a field day, with rates rising across the board.

“Just a year ago the Premium Bond prize fund effective rate was sitting at 1%, and this marks the sixth time NS&I has hiked the prize fund in the past year, showing just how tricky it is to keep up with the wider market.

“Once again, the chances of winning a prize haven’t changed, and remain at 24,000 to one, but instead you’re more likely to win a bigger prize if you do win.

“NS&I has been on a mission to draw in more money this year, and its plan is working so far: in the three months to April, NS&I took in £7 billion of savers’ money, with the combination of higher rates and the security of a Government-backed provider proving to be a big draw.

“However, the fact remains that most people will be better opting for a standard savings account rather than Premium Bonds.”

She said that with some savings providers offering 4% on easy-access accounts, “that’s a better bet for a guaranteed return on your cash”.