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NS&I to increase the Premium Bond prize rate to 1.4% – here's all you need to know

NS&I will increase its Premium Bond prize-fund rate from 1% to 1.4% from Wednesday 1 June, increasing the odds of a win from 34,500-to-one to 24,500-to-one, and adding more than one million prizes to the June draw. 

The number of £100,000 prizes will increase from six to 10, while the number of £50,000 prizes will rise from 11 to 19. However, there will still only be two monthly winners of the top £1 million prize. 

While the rise is good news, founder Martin Lewis said that "most" savers with "typical (median) luck", with the maximum £50,000 invested in Premium Bonds, will still do better on average with a top easy-access savings account paying a higher, guaranteed 1.5% rate of interest. See Martin's tweets below: 

The number of prizes will rise but your odds of winning are still relatively low

Premium Bonds are essentially a savings account you can put money into, where instead of being paid interest, tax-free prizes are awarded in a monthly prize draw – meaning there's no guarantee you'll get any return on your money. Prizes range from £25 to £1 million.

The nearest thing Premium Bonds have to an interest rate is their annual prize rate, which is what's increasing from 1% to 1.4%. It's a benchmark of the "average" return you'll get for your money – though in reality, there's no guarantee you'll win anything at all.

What it really means is that for every £100 invested in Premium Bonds across the market, £1 (soon to be £1.40) is paid out every year in prizes. But as the prizes include two £1 million payouts and other big prizes, many also win far less – even with the rate increasing, improving the odds from June. 

Below is a breakdown of how the number of prizes awarded is estimated to change from June:

Number of Premium Bond prizes 

Value of prize Number of prizes in May 2022 Number of prizes (estimated) in June 2022
£1,000,000 2 2
£100,000 6


£50,000 11


























Total: 3,415,068

Even with the rate increase, Premium Bonds are likely to be beaten elsewhere

NS&I chief executive Ian Ackerley said the increased prize-fund rate means that Premium Bonds will be "priced appropriately" with the interest rates of other savings providers.

But for most savers with average luck and who don't pay tax on savings interest, normal savings are still likely to beat Premium Bonds. This is because savings pay a constant rate of interest – so if you get the top easy-access rate of 1.5%, you'd get roughly £15 in interest for every £1,000 saved. Though this rate is variable, it provides more certainty than Premium Bonds, where many saving the same £1,000 would win nothing.

Plus, as Martin explains above, even with the increase, the average effective interest rate is still less than the top easy-access rate, and far less than the top fixes. See our Top savings accounts guide for more.

Many people often think "I'm likely to get about 1% – soon to be 1.4% – and there's a small chance of winning a million". But the main point is that this isn't correct. You're actually likely to get quite a lot less than 1% or 1.4%, and there's a negligible chance of winning a million. If you know and you're OK with this, then investing in Premium Bonds isn't a bad plan. For full info, see our Premium Bonds – are they worth it? guide.

Premium Bond prizes are tax-free – though this won't benefit the majority

The majority of people don't pay any tax on savings interest due to the personal savings allowance, so the fact that Premium Bond prize winnings are tax-free won't make a difference to many.

The only exception is if you're one of the small percentage of people who pay tax on interest, and you hold a lot of Premium Bonds, as here they may be worth it. For this group, tax-free cash ISAs will likely beat normal savings and Premium Bonds, but if you've maxed out your £20,000-a-year ISA allowance, and you hold a lot of Premium Bonds, you could beat the returns you get from normal savings with bonds.

You can buy Premium Bonds via the NS&I website

If they're right for you, the minimum amount you can buy is £25 for one-off purchases and monthly standing orders, while the maximum amount you can hold is £50,000.

Prizes are always tax-free (they're also backed by the Government, meaning your money's fully protected – though savings held with any UK-regulated institution are also protected up to £85,000). For more info on how Premium Bonds work – and whether they're worth it – see our Premium Bonds guide. 

To ensure you're making your savings work for you, see our Top savings and Top ISAs guides for the current best buys.

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