NS&I to Increase Premium Bond Prize Rate to 1.4%


May 2022
NS&I to Increase Premium Bond Prize Rate to 1.4% (1)

NS&I to Increase Premium Bond Prize Rate to 1.4%

An additional 1.4 million prizes will be awarded to Premium Bond holders in June as National Savings & Investment (NS&I) increases the prize fund rate from 1% to 1.4%.

From the June draw, the odds of each £1 Premium Bond number winning a Premium Bonds prize will fall from 34,500 to 1 to 24,500 to 1. 

The number of £100,000 prices will increase from six to 10, and the number of £50,000 prizes will rise from 11 to 19. There will also be 40 winners of the £25,000 prize, up from 24, and 98 winners of £10,000, up from 58.

However, there will still be only two monthly winners of the top £1 million prize.

In total, NS&I savers will receive £138 million in tax-free prizes in June, £40 million more than in May. An estimated 4.84 million prizes will be awarded, up from 3.42 million in May. However, 4.75 million of those prices will be for just £25.

The adjustment follows the increase in the Bank of England’s base rate to 1% and a wave of hikes in rates for saving accounts and ISAs.

NS&I chief executive Ian Ackerley said that the new prize fund rate ensures that “Premium Bonds are priced appropriately when compared to the interest rates offered by our competitors.”

“It also ensures that we continue to balance the interests of savers, taxpayers and the broader financial services sector,” he added.

The hike comes as Premium Bonds celebrate 65 years since the first drawing was held in June 1957. Since then, ERNIE, the Electronic Random Number Indicator Equipment, has generated the numbers for 559 million tax-free prizes worth approximately £22.8 billion.

Around 21 million people - one-third of the UK - currently hold Premium Bonds from the Treasury-backed NS&I. They’re each allowed to stash up to £50,000 into Premium Bonds accounts. 

Premium Bonds saw a surge in popularity as savings rates eroded during the pandemic and people squirrelled away money they couldn’t spend on holidays and meals out. There are currently almost 118 billion bond numbers eligible for the drawing, up from just over 86 billion in March 2020.

However, data scientists have cautioned that the odds of winning big on Premium Bonds are very slim. Last October, data scientist Andrew Zelin calculated that a saver with £1,000 stashed in Premium Bonds would have to keep their money there more than 200 years before they had an even 50/50 chance of winning just £50. By 5,487 they’d have an even shot at £1,000. 

Have your eyes on the top £1 million prize? Your descendants will be waiting until 3.2 million years for an even shot at it. They’ll also have to travel back to the UK from Mars to claim it.

The odds have improved slightly with the latest rate adjustment but savings experts caution that unless you're especially lucky, you could earn more by putting the money in another type of savings product.