Boost for Premium Bond holders as prize fund rate rises to 4.35% and players have a better chance of winning

MILLIONS of savers are set to see a huge boost within weeks. NS&I (National Savings and Investments) is making a big change to Premium Bonds in September and it’ll boost your chances of winning. NS&I (National Savings and Investments) is making a big change to Premium Bonds Source: NS&I Premium Bonds have the security of being 100% backed by the Treasury. Instead of paying interest, there is an annual prize fund rate that funds the monthly draw for tax-free prizes. Sign up for the Money newsletter Thank you! The savings giant has revealed that it is boosting the Premium Bonds prize fund rate. It’s also shortening the odds, meaning millions of savers are in with a better shot of bagging some cash from September. The prize fund rate is jumping from 3.80% to 4.35% tax-free. Meanwhile, the odds of any £1 Bond winning something are improving from 22,000 to 1 to 21,000 to 1. NS&I also boosted its fund rate and odds in July this year. There is now an estimated £63 million worth of extra prizes up for grabs in September compared to August. Most read in Money This means that 308,000 more prizes are being handed out, pushing the total prize pot past £497million. There will be 12 more £100,000 prizes, 27 more £50,000 prizes, and 51 extra £25,000 prizes come September. Plus, more than 2.3 million lucky Bond holders will pocket £100 each. It’s not just Premium Bonds getting a boost either. NS&I has also hiked rates for Direct Saver and Income Bonds customers. This will be good news for around 428,000 and 222,000 savers respectively. Direct Saver now pays 3.75% gross/AER, while Income Bonds are up to 3.69% gross/3.75% AER. If you’ve got a British Savings Bond maturing soon, you’re in luck too. Rates have gone up across the board on one, two, three and five-year fixed terms, with returns now hitting as high as 4.85%. Andrew Westhead, NS&I’s Retail Director, said: “Not only is NS&I boosting Premium Bonds from September, but from today we are also increasing interest rates for our British Savings Bonds, plus our Direct Saver and Income Bonds. “This is to ensure we reflect current market conditions and help to meet our Net Financing target.” He added: “This is the second time this year we have been able to increase Premium Bonds prize fund rate and shorten the odds. “The September Premium Bonds draw is now expected to have more than 6.5 million tax-free prizes worth over £497 million.” The moves comes as NS&I chases a hefty £15billion Net Financing target this year. This is the official goal set by HM Treasury for how much net cash the organisation must raise from savers to help fund the UK government. Sarah Coles, head of personal finance at AJ Bell, said: “NS&I is pulling out all the stops to attract the cash it needs. “ It has decided there’s no point tinkering around the edges: a raft of rates have to rise – including pulling the trigger on the big gun of Premium Bonds.” Sarah added that the new one-year bond rate is “unusually competitive”. “There are better deals on offer elsewhere – especially if you are fixing for longer – so if the rate is the most important thing to you, you can find a more rewarding home for your money,” she added. “However, getting so close to the competitive deals could be enough to tempt some savers into the NS&I fold.” Caitlyn Eastell, Personal Finance Analyst at Moneyfactscompare.co.uk, said that while there is plenty to like, you could get a better deal elsewhere. She said: “The latest move from NS&I may leave savers feeling more encouraged. “Not only has it boosted the Premium Bond prize fund from 3.80% to 4.35% tax-free, but the odds have also improved to 21,000 to 1.” “That means more than 308,000 extra prizes can be expected in September.” “Despite the improved odds, they are a game of chance and the 4.35% shouldn’t be mistaken for a headline rate. “The best easy access ISAs pay over 4.5% and returns could be even higher if they’re willing to lock away their cash.” Just remember, unlike a fixed savings account, there’s no guarantee you’ll win anything at all. How likely am I to be a winner? The chance of winning a prize with an individual bond in September will be 21,000 to one. Each bond has an equal chance of winning and the more you buy, the more your chances improve. You can check your odds depending on how many bonds you have and how long you’ll keep them using MoneySavingExpert.com’s helpful calculator. This makes it easier to see if Premium Bonds are right for you, or if you’d be better off with another savings account. It’s also worth noting that Premium Bond winnings are tax-free. Anyone who has used up their annual ISA limit or personal savings allowance could benefit by saving into Premium Bonds. How do I check if I have won? You can use the NS&I Premium Bond prize checker online to see if your numbers have come up. You’ll need to know the numbers of your Premium Bonds which can be found on your Bond record or through your online account. If you’ve lost track of your numbers you can ask NS&I for them. There’s also an official app for iPhones and for Androids for checking prizes too, and even an App for Amazon Echo which means you can just ask Alexa. For this you will need to use your NS&I number rather than each Premium Bond number. It’s 11 digits long and will be on any communication you’ve had with NS&I. You don’t always need to check your numbers as you can get prizes under £5,000 paid straight into your bank account, or automatically buying more Premium Bonds. For higher value prizes worth more than £5,000 NS&I will contact you by post and if you scoop the £1million jackpot, someone will pay you a visit to let you know! NS&I will no longer send out prize cheques in the post. How do premium bonds compare? Before you sign up, it’s important to check how it compares to the rest of the market to make sure you get a good deal. We used MoneyFactsCompare to weigh up NS&I’s rate for its Direct Saver account to other easy-access accounts on the market today. LemFi’s instant access savings accounts is currently offering 5% interest. Savers could also lock away away their cash and get the same interest with the Investec and Market Harborough Building Society. The only downside to fixed bond accounts is that you’re forced to lock away your cash for a defined period of time. So it’s also worth weighing up to see what’s best for you. We’ve previously explained how to find the best savings accounts to suit your needs. Comment now