Premium Bond prize rate hiked: what does it mean for your chances of winning?

NS&I has increased its premium bond prize rate for the second time in six months. Here's what it means for your chances of winning a tax-free cash prize

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Your chances of winning a prize from the monthly Premium Bonds draw are about to increase, after it was confirmed that the prize rate will be boosted from October, giving savers the chance to win an extra £76m of prize money.

NS&I has boosted its prize fund rate from 1.4% to 2.2% - which means you have a higher chance of winning prizes, which range from £25 up to £1 million. 

This is the second time NS&I has boosted the fund prize rate as it tries to play catch-up with increased rates on standard savings accounts.

The increase also means the rate technically tops the best easy access savings account, where the top rate is currently 1.85%. 

However, there is a difference between standard savings accounts and NS&I premium bonds rate where the ‘prize fund rate’ isn’t a fixed rate of interest, but more an indicator of the average payout for someone with average luck.

“Savers shouldn’t cling to the ‘projected prize fund figure’ as many Premium Bonds holders get zero return on their savings.

“Most savers would be better-off with a standard easy-access savings account that pays out a guaranteed rate of interest. There are a couple of groups of people who could benefit from using premium bonds, including the very wealthy and those nearing their tax-free savings allowance,” Laura Suter, head of personal finance at AJ Bell said.

What does the higher Premium Bonds prize rate mean for your chances of winning a prize?

The new Premium Bonds rate rise will give savers the chance to win an extra £76m of prize money. The changes will see the number of £5,000, £10,000, £25,000, £50,000 and £100,000 prizes almost double.

There will also be 19 times as many £50 and £100 prizes paid out from October. The odds of each £1 Premium Bond number winning a prize will also improve from 24,500 to 1 to 24,000 to 1 from October 2022.

Current and new prize fund rate and odds

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Current and new prize fund rate and odds
Current prize fund rateCurrent oddsNew prize fund rate (from June 2022)New odds (from June 2022)
1.4% tax-free24,500 to 12.2% tax-free24,000 to 1

Number and value of Premium Bonds prizes

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Number and value of Premium Bonds prizes
Value of prizes in Sep 2022Number of prizes in Sep 2022Value of prizes in Oct 2022 Number of prizes in Oct 2022 (estimated)
£1,000,000 2 £1,000,000 2
£100,00010 £100,00018
£50,00020 £50,00035
£25,00039 £25,00072
£10,00098 £10,000178
£5,000199 £5,000357
£1,0002,779 £1,0004,364
£5008,337 £50013,092
£10038,137 £100728,737
£5038,137 £50728,737
Row 11 - Cell 0 Row 11 - Cell 1 Row 11 - Cell 2 Row 11 - Cell 3

Source: NS&I 

How can I buy Premium Bonds? 

Anyone over the age of 16  can buy Premium Bonds, and you can do this through the NS&I website, by phone or by post.

While each £1 bond can win you a prize, the minimum investment is £25. You can have a maximum of £50,000 in Premium Bonds, and your money is totally safe as NS&I is backed by the Government.   

You can buy Premium Bonds for yourself, for your own child if they’re under 16, or for someone else’s child as a gift.

Premium Bonds can be a good way to save for your grandchildren. However, you need the parent or guardian’s permission in order to purchase Premium Bonds for children. That’s because they are responsible for looking after the bonds until the child turns 16, and may need to provide ID as part of the application process.

How do Premium Bonds work? 

Each month your Premium Bonds will be automatically entered into a prize draw, with the winning numbers pulled at random. 

All winnings are tax free, regardless of whether you win £25 or £1 million.

You can choose to reinvest any prize wins by buying more Premium Bonds, have the money paid into a bank or building society account, or sent to you as a cheque.  

Prizes of £5,000 or more aren’t paid automatically.  NS&I will get in touch as you’ll need to complete a claim form, and if you’re lucky enough to win a million, you’ll get a visit from NS&I’s ‘Agent Million’.

You can withdraw your money at any time, either online, by phone or with a postal application, with funds paid into your nominated bank or building society account.

Tracing lost Premium Bond winnings 

The easiest way to check if you’re a winner is to download the NS&I app, which flags up your prizes each month.  

However there’s a whopping £60 million lying unclaimed in Premium Bond prizes according to NS&I. So if you think you may have a Premium Bond windfall lying unclaimed, you can check using NS&I’s prize checker tool

Sue Hayward

Sue Hayward is a personal finance and consumer journalist, broadcaster and author who regularly chats on TV and Radio on ways to get more power for your pound.  Sue’s written for a wide range of publications including the Guardian, i Paper, Good Housekeeping, Lovemoney and My Weekly. Cats, cheese and travel are Sue’s passions away from her desk!

With contributions from