NS&I to make third premium bond increase this year

The prize fund now includes more prizes from £50 to £100,000.

The National Savings and Investments (NS&I) is set to increase its Premium Bond prize fund rate to 3.30% AER from March. This will be the third increase to the prize fund this year, having finished 2022 at 2.20% AER.

“Premium Bonds are one of the nation’s most-loved ways to save, giving people the monthly anticipation of a potential win while knowing their money is 100% safe,” said Ian Ackerley, outgoing Chief Executive at the NS&I.

While the Government-backed institution expects the latest increase to add around £15 million to towards its prizes, the chance of winning a prize remains at 24,000 to one. The last time these odds changed was in September’s increase.

As with the most recent draws, the increased rate will make some of the existing prizes more valuable.

There will now be three more prizes of £100,000, six more prizes of £50,000, and 12 more prizes of £25,000, to name a few.

As a result, there will be over 243,000 fewer £25 prizes on offer.

In addition to its Premium Bonds, the NS&I increased the rate on its Direct Saver and Income Bonds to 2.85% AER and 2.89% AER respectively.  

While both offers are easy access accounts, the main difference comes through how the interest is paid. The Direct Saver pays interest yearly, while the Income Bond pays its rate monthly.

This means the Direct Saver will likely appeal to those who wish to save and earn consistent compound interest, while the Income Bonds could benefit those willing to supplement their regular income.

Further details of these accounts can be found on our savings chart.  

At 3.10% AER, the top rate on the easy access chart comes from Paragon Bank. More information on this deal can be found in an article written last week.

While the Direct Saver and Income Bonds’ rates are lower than Paragon Bank’s offer, the Premium Bond Prize Fund does better this rate.

Despite this comparison, it is important for savers who are looking at investing in Premium Bonds to remember that winning a prize is not guaranteed.