Premium Bonds odds improve as NS&I increases prize fund rate

NS&I will be raising the prize fund rate this week to the highest level since March 1999. The rate will increase from four percent to 4.65 percent.

The chances of winning have been improved for the Premium Bonds prize fund draw, with odds now at 21,000 to one.

Starting in the prize draw of September 2023, this change will result in an approximate increase of £66 million to the prize pool.

In the upcoming month of September, there will be a chance to win more than £470million in prize money. The number of available prizes has also increased significantly, with 5,785,904 up for grabs. This marks a rise of over 269,000 compared to the previous month of August 2023.

Premium Bonds investors will enjoy an increased likelihood of securing a cash reward.

Dax Harkins, the CEO of NS&I, stated: "Premium Bonds are extremely popular in the country as a savings option. By raising the prize fund rate to the highest level recorded since 1999 and enhancing the chances of winning, we are giving more individuals the opportunity to win rewards every month."

"This rise in rates will guarantee that our savings offerings remain appealing to clients, all the while maintaining a delicate equilibrium between the requirements of depositors, taxpayers, and the wider financial industry."

The likelihood of winning for every £1 Bond number in the prize draw of August 2023 stood at a ratio of 22,000 to 1.

There will continue to be two million-pound jackpot prizes available, along with an estimated 90 prizes worth 100,000 pounds in the upcoming draw for September. This draw will be held this week and marks an increase from the 77 prizes offered in the previous month of August.

In August 2023, there were a total of 154 lucrative rewards valued at £50,000 waiting to be won. Looking ahead, it is projected that there will be around 181 enticing prizes up for grabs in the coming month.

The prize fund rate for Premium Bonds has experienced a steady upward ascent in the past three prize draws. It began at 3.3 per cent and climbed to 3.7 per cent in July 2023, before finally reaching a solid four per cent in August 2023.

The numbers have risen multiple times since last May, when the rate escalated from one percent to 1.4 percent.

Laura Suter, the individual responsible for managing personal finances at AJ Bell, expressed that the surge was a foreseeable outcome due to the growing rivalry in the savings industry.

She mentioned, "During the month of June, NS&I experienced a decline in the amount of money being deposited and did not observe any overall increase, as the withdrawals equaled the amount of money being saved with the provider."

Investing in Premium Bonds seemed like a more appealing risk when interest rates were at their lowest.

However, currently individuals who save their money are relinquishing the opportunity to earn a 5% return on easily accessible accounts in hopes of potentially obtaining significant winnings from Ernie. This decision presents a more difficult choice to make.

Dax Harkins stated that the rise in rates would 'guarantee that our savings offerings continue to be appealing to our customers.'

Ms Suter explained: "Whenever NS&I raises its rates, it has the ability to allocate additional prizes to the prize fund and adjust the odds, resulting in an increased chance of winning a prize for individuals."

Surprisingly, for the second time within a span of two months, the service provider has further enhanced your chances of winning, increasing it to a staggering 21,000 to one.

When comparing, the likelihood in May of the previous year was a mere 34,500 to one, showing a considerable enhancement in slightly more than a year. However, it is important to note that there are still only two opportunities every month to seize the coveted £1 million reward.

Myron Jobson, a seasoned expert in personal finance analysis at interactive investor, cautioned that the rise in the prize fund rate does not necessarily translate to an elevated interest rate for the average individual's savings.

He stated: "Premium Bonds offer a enjoyable alternative to a readily available savings account and could entice certain individuals who are hoping for a stroke of luck to increase their wealth during these challenging times with rising living expenses."

However, the truth persists that although certain individuals may be fortunate to strike it rich or achieve substantial winnings in the beginning, others may have to save and patiently wait for extended durations just to receive a meager profit.