NS&I announces Premium Bonds prize boost and hikes savings rates

The number of Premium Bonds prizes worth £50 to £100,000 will increase from next month’s draw, according to savings provider NS&I.

The Premium Bonds prize fund rate will increase from 3.00% to 3.15%, effective from the February 2023 prize draw.

This follows the rate increasing from 2.20% to 3.00% on January 1 2023.

The changes will mean, for example, that there are an estimated 59 £100,000 prizes up for grabs in February, up from 56 in January.

There will also be an estimated 117 £50,000 prizes next month, up from 111 this month.

And there will be around 12,573 £1,000 prizes next month, up from 11,968 in January.

The change to the Premium Bonds prize fund rate is the fourth upwards change that NS&I has made in the past year, meaning that the prize fund rate is at its highest level in more than 14 years.

The overall odds of each £1 bond winning a prize will remain unchanged at 24,000 to one, with an estimated 2,376,161 smaller prizes of £25 available in February, down from 2,617,902 in January.

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

Treasury-backed provider NS&I also said that the interest rate paid on its Direct Saver and Income Bonds has increased from 2.30% to 2.60%, while the interest rate on Direct Isa has increased from 1.75% to 2.15% from Tuesday.

NS&I has also increased the interest rate that it pays on its Junior Isa from 2.70% to 3.40% from Tuesday.

The changes mean that Income Bonds are now paying their highest rate of interest since 2008, while the interest rate on the Direct Isa is the highest since 2013.

The interest rate paid on NS&I’s Direct Saver is the highest since the account launched in March 2010.

The changes will ensure that NS&I’s savings products are competitive when compared to the broader savings market, the provider said.

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

NS&I chief executive, Ian Ackerley, said: “Today’s changes will provide a welcome boost for savers of all ages across the country, with more Premium Bond prizes and some of the highest interest rates we’ve seen in over a decade.

“In a fast-changing savings market, we’re committed to making sure our products remain competitive and our customers get a good return on their savings. Today’s changes ensure that we continue to balance the needs of savers, taxpayers and the broader financial services sector.”

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said of the Premium Bonds changes: “The higher prize rate has come alongside a rebalancing of the prizes.

“The number of £25 prizes will actually fall back just over 9% to 2.376 million, while the number of £50 and £100 prizes are up just over 10% to 1.28 million.

“The number of prizes at each level between £500 and £100,000 are also up roughly 5%.

“This is a canny response to inflation. With rapid price rises on all sides, £25 is unlikely to feel quite as rewarding as it did a year ago. By adding so many more £50 and £100 prizes it means more people are winning sums that feel like they will make a difference.

“Increasing the bigger prizes, meanwhile, builds on January’s move to introduce more life-changing sums of money.

“At the moment, when money is so tight for so many, the idea of winning a prize that will make an enormous difference to people’s lives is incredibly attractive.”

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