Which? Money Podcast
Join us on our weekly audio show for the latest money news and personal finance hacks to help make you better off.
Listen nowNS&I boosts premium bonds prize fund: are you more likely to win?
The number of higher value prizes will increase from January's draw
Premium bond holders will be more likely to win higher value prizes from January's prize draw, as National Savings and Investments (NS&I) is set to increase the 'prize fund rate' to 3%, up from 2.2%.
An extra £80m will be added to the prize fund value - but your overall chances of winning will remain the same, as there will only be around 15,000 extra prizes.
Interest rates across several other NS&I savings products will increase from today (13 December).
Here, Which? explains what the prize boost means for premium bonds, and looks at whether it's worth switching to save with NS&I.
What's happening to the prize fund?
The premium bonds prize fund rate is increasing to 3%, up from 2.2%. This is the overall annual growth across the billions of premium bonds, taking in the few that win £1m as well as the thousands of others who don't win any prizes at all.
The increase will apply from the January 2023 prize draw, when NS&I is expected to give away a total of £299,572,750 in premium bonds prizes, up from £218,993,750 in December.
However, the number of prizes will not see much of an increase; 4,992,880 prizes are expected to be given away in January, up from 4,977,130 in December.
The table below shows how the prize fund will change in the new year:
| Value of prizes in December 2022 | Number of prizes in December 2022 | Number of prizes in January 2023 |
|---|---|---|
| £1m | 2 | 2 |
| £100,000 | 18 | 56 |
| £50,000 | 36 | 112 |
| £25,000 | 71 | 223 |
| £10,000 | 178 | 559 |
| £5,000 | 359 | 1,118 |
| £1,000 | 4,379 | 11,983 |
Source: NS&I
- Find out more: premium bonds - are they worth it?
Am I more likely to win a premium bonds prize?
Despite the extra money being given away by NS&I, the odds of winning any prize remain at 24,000 to 1.
This is because of the reduction in the number of prizes worth £25 - the lowest amount you can win. In January, there will be 875,388 fewer £25 prizes. It means there will now be a total 4,942,878 prizes worth £100 or less. That's 11,466 less than in December's draw.
The good news is there will now be a greater number of higher value prizes. Compared to December, January's prize draw will contain more than three times as many prizes worth £100,000, £50,000, £25,000, £10,000 and £5,000.
If you're considering investing in premium bonds now, note that your bonds won't be entered into a prize draw until February; premium bonds are eligible for the draw once they've been held for one full calendar month.
- Find out more: what is National Savings & Investments?
Interest rate hikes for other NS&I savings
NS&I has also boosted rates on several of its savings products, which you can see in the table below:
| Product | Previous AER | New AER |
|---|---|---|
| Direct Saver | 1.8% | 2.3% |
| Income Bonds | 1.8% | 2.32% |
| Investment Account | 0.4% | 0.6% |
Source: NS&I
The changes are an attempt to stay competitive in a market that is seeing some savings rates soar to nearly 5% - although there are signs that savings rates may have now peaked, particularly for fixed-rate deals.
NS&I chief executive, Ian Ackerley, said: 'The change to the premium bonds prize funds rate, as well as the changes to Direct Saver, Income Bonds and Investment Account, will mean that our products are priced appropriately when compared to the rest of the savings market. This will also ensure that we continue to balance the interests of savers, taxpayers and the broader financial services sector.'
- Find out more: how to find the best savings account
