Premium Bonds rate hits 3.3% as prize fund is boosted again
>
Premium Bond savers are poised for even better payouts after National Savings & Investments (NS&I) increased its prize pool to 3.3 per cent from next month’s draw.
The change in the Premium Bond price fund percentage is the fifth increase NS&I has made in the past year and the third increase in 2023 alone.
NS&I raised the rate from 2.2 to 3 percent on January 1, and this month the prize money went up again to 3.15 percent for February draws.
Savings lottery: Premium Bonds offer an average price fund return that has now risen to 3.3% – a level that exceeds most easily accessible savings deals.
At the current rate of 3.3 per cent, the odds of each £1 bond winning a prize remain 24,000 to 1, but the changes will increase the number of prizes worth £50 to £100,000 from the March draw.
For example, there are now 62 prizes worth £100,000, up from 59 this month, and the number of £50,000 prizes will increase from 117 to 123 in March.
The Premium Bond prize fund rate now beats all easily accessible savings accounts, the Yorkshire Building Society’s Rainy Day Saver account, by 3.35 per cent.
But the YBS account has strict restrictions, including paying that fee up to £5,000 and allowing withdrawals only two days a year – on the anniversary of opening or the day of closing.
In a further Valentine’s Day boost to people’s piggy banks, NS&I also announced increases for Direct Savings and Income Bonds customers.
As of today, they will see their interest rates rise from 2.6 percent to 2.85 percent.
Ian Ackerley, chief executive at NS&I said: ‘Premium bonds are one of the country’s most popular ways to save, allowing people to anticipate potential monthly gains while knowing their money is 100 per cent safe.
“We are also giving a Valentine’s Day boost to our Direct Saver and Income Bonds clients, who will see their interest rates rise from today.
‘We do everything we can to ensure that our products remain attractive and that our customers can continue to save with confidence.
“Through today’s changes, we continue to balance the interests of savers, taxpayers and the wider financial sector.”
Bounty bond winners
| Price | Area | Bond value |
| £1,000,000 | Sefton | £5,000 |
| £1,000,000 | Sheffield | £2,000 |
| £100,000 | Lancashire | £30,000 |
| £100,000 | West Midlands | £5,000 |
| £100,000 | Staffordshire | £36,825 |
| £100,000 | South Gloucestershire | £14,000 |
| £100,000 | Essex | £39,000 |
| £100,000 | East Riding of Yorkshire | £49,750 |
More February 2023 winners
Are Premium Bonds the best place for easy access savings?
The average return on Premium Bonds has improved significantly over the past year. At the start of 2022, they paid just 1 percent, which rose to 1.4 percent in June and then to 2.2 percent in October, followed by 3 percent this month.
Compare that to the best easy-to-access deals in This is Money’s top savings interest rate charts and you’ll understand why Premium Bonds look attractive.
Thus, the return on Premium Bonds exceeds the best no-obligation, easily accessible savings deal and comes within a whisker of the top.
But there are two questions to ask: are Premium Bonds easy to access and how likely am I to get that average return?
Premium Bonds are as close as you can get without really having direct access. As our answer to a recent reader question explained, it can take a few days to get your money out of Premium Bonds.
Instant access savings accounts are the ideal place for your rainy day money, which you may need quickly if an emergency arises. However, many of us can get through a few days before we get our hands on our savings.
Ultimately, it is up to you and your circumstances to determine whether Premium Bonds pass the test.
The next question is more complicated: are you getting the average return? Of course, that depends on luck, and in a lucky year you might do much better than the mentioned 3.30 percent, while in an unlucky year you could do much worse.
There is one other point to note, however, and that requires a recap of school math: the Premium Bond prize fund percentage is an average average and reflects the total amount of prizes paid out to everyone compared to the amount paid out for all bonds. is arrested.
The problem with this, as with any mean average, is that it can be biased by the large and small numbers at either end or by odd numbers. Since Premium Bonds pay out a selection of different sized prizes ranging from £25 to £1,000,000, any given individual will not get the average average return.
You can read more from the This is Money editor here: Simon Lambert: Premium bonds may be the best place for rainy day savings right now
Some links in this article may be affiliate links. If you click on it, we may earn a small commission. That helps us fund This Is Money and use it for free. We do not write articles to promote products. We do not allow any commercial relationship to compromise our editorial independence.