Premium Bond prize fund rate to fall in August
The Premium Bond prize fund rate is set fall again next month, but if you own some, will you stay loyal to your bonds or decide now’s the time to seek guaranteed returns from savings accounts?
The prize fund rate will be cut to 3.6% from the August prize draw, down from 3.8% currently and a peak of 4.65% in September 2023. The odds of winning a Premium Bond prize will remain unchanged at 22,000 to one.
The prize fund rate prize fund is supposed to be is the average return you would get based on having average luck in the prize draws. However, some claim this figure could be seen as misleading.
Laura Suter, director of personal finance at AJ Bell, said; “Clearly not everyone has ‘average’ luck, otherwise the prizes would be handed out equally to every saver. The fact that there are some very large prizes also skews the figures – as it means that for every person who wins £1 million or £100,000 there will be hundreds who win nothing.”
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A Freedom of Information (FOI) request obtained by AJ Bell recently revealed that nearly two-thirds of Premium Bond holders, equivalent to just under 14.4 million people, have never won a prize at all.
Even though millions have yet to win, it’s not hard to see the appeal of Premium Bonds, which offer bondholders the chance to scoop two £1m jackpots each month, along with a thousands of smaller prizes, ranging from £25 up to £100,000. According to NS&I, nearly 71m Premium Bond prizes were won in 2024, with a total value of more than £5.5 billion.
However, some may be winners and not yet know it, with the total sum of prizes that haven’t been claimed for at least 15 years currently standing at £32 million.
Sarah Coles, head of personal finance at Hargreaves Lansdown said: “If you have your numbers, you can check them on the NS&I website. Otherwise, you can use NS&I’s Tracing Service or the My Lost Account service. In the previous tax year, the business found more than 54,000 accounts, holding over £172 million. It means you could already be sitting on a big win.”
If you haven’t ever won and would prefer your money to be earning guaranteed returns, there are plenty of competitive saving accounts too choose from. According to Moneycomms.co.uk, the top no strings easy access savings accounts include Secure Trust Bank’s Access account which pays 4.45% annual interest a year, Kent Reliance’s Easy Access account paying 4.41% annual interest and Hodge Bank’s Easy Access account which pays 4.40% annual interest.
If you’re looking for a tax-efficient Cash Isa, both Plum and Trading 212’s Cash ISAs pay 4.98% annual interest, although both rates include a bonus for 12 months, at which point you may want to move your money elsewhere.
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Ms Suter said: “Despite interest rate cuts, Premium Bonds are still likely to continue to be very popular as they are backed by NS&I and many savers have huge brand loyalty to the organisation. There are a few groups where Premium Bonds are a very attractive option, but for most the safety of a regular interest rate will be better, and savers may want to shop around for the best rates on offer.”