NS&I to increase Premium Bond prize fund to highest rate since 2007

The odds of winning will also improve to a 15-year high.

NS&I will be increasing its Premium Bond prize fund rate to 4% from the August draw – the highest it’s been since 2007. This is the second time it’s announced a rate increase within the space of a month; only on 20 June NS&I said it would be increasing the prize fund rate to 3.70% from July.

This latest rise will see NS&I pay out £4 in prizes for every £100 of Premium Bonds bought as of August. Unlike the last announcement, your chance of winning is also increasing. Currently, the odds of winning are 24,000 to one. From August, this will improve to 22,000 to one – the best in 15 years.

Alongside the prize fund rate rise, NS&I also announced it will be raising the rates paid by both its Income Bonds and Direct Saver Accounts. From 13 July, its Income Bonds will offer 3.45% AER while its Direct Saver will pay 3.40% AER.

Despite the increase, both rates fall significantly below that offered by the current market-leading easy access account. Principality BS currently pays 4.30% AER, while many other providers are offering in excess of 4.00% AER.

The increase to the Premium Bond prize fund rate and selected easy access accounts follows NS&I exceeding its Net Financing target for the year. It delivered £10.0 billion of Net Financing to the Government in 2022-23 – well above its £6.0 billion annual target.

Being backed by the UK Government, NS&I is often perceived as a safe haven for savings, meaning it doesn’t necessarily have to compete for custom by offering the best interest rates.

In addition to this, its Premium Bonds remain among the most popular savings products in the UK. In February 2023, Premium Bonds created the 500th £1 million jackpot winner, while March 2023 saw the largest Premium Bond prize fund on record at £330 million.