Premium Bond prize fund rate to fall from April
NS&I is cutting the Premium Bond prize fund rate from 3.6% to 3.3% in April, lengthening the odds of each £1 bond winning a prize from one in 22,000 to one in 23,000.
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More than 24 million people in the UK currently hold Premium Bonds, with most attracted by the chance of winning one of the two £1 million monthly jackpots, and the fact that their investment is 100% backed by the Treasury.
However, the reality for many bondholders is less glamorous, with a Freedom of Information request by AJ Bell finding that 62% of Premium Bond holders, equivalent to around 14.3 million people, have never won a prize of any size.
Mark Hicks, head of Active Savings at Hargreaves Lansdown, said; “Premium Bonds don’t pay out interest - their prize rate is more of a benchmark of average return for your money. However, the reality is that, if you don’t win anything, you don’t get anything at all.“
Those with only a small number of Bonds are the least likely to win. Between February 2025 and January 2026, fewer than 1% of prizes went to accounts holding less than £1,000.
Laura Suter, director of personal finance at AJ Bell, said: “This highlights the significant disadvantage that many account holders with smaller amounts face when it comes to the likelihood of winning a prize. Even when looking at account sizes up to £10,000, just 6% of prizes fell into the hands of account holders in that bracket during the period. Conversely, 53% of all prizes went to those with the maximum account value of £50,000.
“Among non-winners the average Premium Bond account holding is £128, showing that unless you’re willing to fill the accounts with larger sums of spare cash, you’re unlikely to win at all. Interestingly, it also represents an increase in the average non-winning account holding from last year by a fifth.”
If you’re fed up with not winning anything on Premium Bonds, you might be considering moving your savings elsewhere. The good news is that recent days have seen several cash individual savings account (ISA) providers raise rates on these tax-efficient accounts in a bid to tempt savers to use their annual ISA allowance before the end of the tax year on April 5.
A spokesman for Moneyfacts said: “It’s not only the leading rates that have increased over the past couple of days. Many other providers have raised rates on their range of ISAs, including Castle Trust Bank, Tesco Bank and Tembo Money, giving savers a wider range of competitive accounts to choose from.”
Those with a stronger appetite for risk may want to consider investing in a stocks and shares ISA instead, although if you’re new to investing, you may want to seek professional financial advice on the best options to suit your individual circumstances.
Ms Suter said: ““Over the longer term, investing has proven to beat cash returns, and short of winning one of the maximum prizes will undoubtedly stand a better chance than Premium Bonds at helping someone to amass wealth. For example, someone who had invested the non-winning Premium Bonds account average of £129 into Fidelity Index World 10 years ago would have seen a return of 252.3% and a pot worth a healthy £454.
“Suffice to say the vast majority of Premium Bond holders will not have been anywhere near those levels, and would likely have stood to benefit significantly had they put their money in investments rather than letting it gather dust in a Premium Bonds account during that time.”