Premium Bonds ups prize fund rate to its highest level since 2007

National Savings & Investments will increase the prize fund rate on its popular Premium Bonds savings account to its highest level since 2007.

The prize fund rate will increase to 4 per cent from the August draw, meaning the odds of winning are the best they have been in 15 years. 

The rate was previously set at 3.7 per cent, meaning the odds of winning a prize with each £1 bond purchased have increased from 24,000 to one to 22,000 to one. 

Although there will continue to be only two £1million jackpot prizes, the number of other prizes will rise.

This means that the number of £100,000 prizes will rise from 71 to 77, the number of £50,000 prizes from 141 to 154 and the number of £25,000 prizes from 284 to 308.

Last month, the number of the smallest prize group (£25) went down, however, thanks to the new changes, the number of £25 prizes will rise in August from roughly 1.5million to 1.7million.

The interest rates that NS&I pays on its Direct Saver and Income Bonds are also increasing to 3.40 per cent, from a previous level of 2.85 per cent, effective from 13 July. 

NS&I estimates that the changes will see an extra £30million added to the prize fund from August, with an estimated 460,000 extra prizes up for grabs.

The Government-backed savings bank previously increased the rate from 2.2 to 3 per cent on 1 January, and then again in February to 3.15 per cent, and to 3.3 per cent in March and 3.7 per cent in May. 

NS&I chief executive, Dax Harkins, said: ‘Premium Bonds are one of the nation’s favourite savings products and I’m delighted that we’re able to improve the odds to the best they have been in almost 15 years, with more prizes, more excitement and more life changing wins for savers up and down the country.

‘These changes will benefit millions of NS&I’s savers who have money in Premium Bonds, direct Saver and Income Bonds.’