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Holders of NS&I Premium Bonds are more likely to win big as the prize percentage has risen to a 14 YEAR high… and Income Bond and Direct Isa clients are also benefiting
- Britain’s largest savings firm has increased premium bond payouts to the highest level in 14 years
- The number of prizes worth £50 to £100,000 will increase from next month’s draw
- NS&I has also increased rates on Direct ISAs, Direct Savers and Income Bonds
Customers with National Savings and Investments (NS&I) Premium Bonds now stand a better chance of winning as the company increases its prize pool from 3 to 3.15 percent.
The increase takes the Premium Bond price percentage to its highest level in 14 years and marks the second increase in a month to NS&I’s flagship savings deal.
NS&I increased the rate from 2.2 to 3 percent on January 1, and the new rate of 3.15 percent will apply to draws from February.
NS&I customers can now get a higher interest rate on various products
The ‘price rate’ is in fact the interest rate of the Premium Bonds. Because Premium Bonds pay out every month after a lottery, there is no guaranteed interest – unlike other savings products.
Instead, NS&I uses a price rate to let customers know, on average, how much money they can get back from their Premium Bonds in a year. Prices start from £25 and go up to £1 million.
>> Is it a good time to buy Premium Bonds?
What are the chances of winning Premium Bonds?
Even with the latest update, the odds of any £1 bond winning a prize remain fixed at 24,000 to 1.
This is because while the number of prizes worth £50 will increase to £100,000 from next month’s draw, the number of £25 prizes will drop.
The idea is to entice more people to take out Premium Bonds, according to Sarah Coles, senior personal finance analyst at Hargreaves Lansdown.
She said: ‘By increasing the number of £50 and £100 prizes it ensures that smaller wins still feel important, and by increasing the number of life-changing prizes it offers a huge draw when money is tight.
“The higher prize money is accompanied by a rearrangement of the prizes. The number of £25 prizes will actually fall by just over 9 per cent to 2.376 million, while the number of £50 and £100 prizes have risen by just over 10 per cent to 1.28 million.
“The number of prizes at every level between £500 and £100,000 has also increased by about 5 per cent.”
Premium Bonds are the UK’s largest savings product, with over 21 million people saving over £119 billion in them.
>> Earn more interest on your savings WITHOUT switching: We reveal the best rates offered at seven major banks
Direct Saver, Income Bonds and Direct ISA rates are rising
Premium Bonds are not the only product to receive a sweetener from NS&I.
The Treasury-backed savings provider is also raising rates on its Direct Saver and Income Bonds easy access deals, from 2.3 percent to 2.6 percent.
Meanwhile, the interest on NS&I’s tax-exempt Direct Isa will rise from 1.75 percent to 2.15 percent, while the company’s Junior Isa will rise from 2.7 percent to 3.4 percent.
NS&I chief executive Ian Ackerley said: “Today’s changes will give savers of all ages across the country a welcome boost, with more premium bond prices and some of the highest interest rates we’ve seen in over a decade.
‘In a rapidly changing savings market, we do everything we can to ensure that our products remain competitive and that our customers receive a good return on their savings.
“Today’s changes ensure we continue to balance the needs of savers, taxpayers and the wider financial services industry.”