Premium Bonds prize fund rate to rise to 3.30% from March 2023 draw - are they worth it?
NS&I has increased the Premium Bonds prize rate from 3.15% to 3.30%, meaning there are hundreds of extra prizes in every draw from March. It has also hiked the interest rates on its Direct Saver and Income Bond to 2.85%
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Premium Bonds customers are set to get a boost, after it was confirmed the prize rate will be hiked from March, giving savers the chance to win an extra £15 million of prize money.
NS&I will increase the prize fund rate from 3.15% to 3.30%, making March the third month in a row for a rate rise - and the fifth rate increase in the last year. In May 2022, the rate was just 1%.
The odds will stay fixed at 24,000 to 1, but customers will have more opportunities each month to win £50, £100, £500, £1,000, £5,000, £10,000, £25,000, £50,000, £100,000.
There will be no change to the £1 million jackpots: there will still be two up for grabs each month.
And in further good news for people’s savings pots, Direct Saver and Income Bonds customers will also see their interest rates increase from 2.60% to 2.85% from today.
Premium bonds prizes
|Value of prizes in February 2023||Number of prizes in February 2023||Value of prizes in March 2023 (estimated)||Number of prizes in March 2023 (estimated)|
A 3.30% prize rate means Premium Bonds technically beat the best easy-access savings account, where the top rate is currently 3.15%.
But, there is a difference between savings account interest rates and the Premium Bond prize rate as the latter is not a fixed rate of interest, but an indicator of the average payout for someone with average luck. We explain more on this in Premium Bonds vs savings accounts: which is better for your money?
It’s the latest positive news for savers: In January NS&I brought back its one-year fixed rate Guaranteed Growth Bonds and Guaranteed Income Bonds, which pay up to 4% and 3.9% respectively, while earlier this month NS&I released a fourth issue of its three-year Green Savings Bonds at a competitive 4.20%.
Laura Suter, head of personal finance at AJ Bell, says: “The Premium Bond prize fund getting a boost upwards now feels like a daily occurrence, rather than the once-in-a-blue-moon event it used to be. The Government-backed provider is trying desperately to keep up with the rates war in the savings market, and as soon as it updates the rate its competitors race ahead of it.
“Typically NS&I will never aim to lead the market and beat competition, but in the face of regular savings accounts offering much higher rates and savers being far more likely to shift their money to other providers, the government-backed provider clearly needs to get more savers through the door.”
NS&I Chief Executive, Ian Ackerley, said: “We are committed to ensuring our products remain attractive and our customers can continue to save with confidence. Today’s changes mean that we continue to balance the interests of savers, taxpayers and the broader financial services sector.”
Katie is staff writer at The Money Edit. She was the former staff writer at The Times and The Sunday Times. Her experience includes writing about personal finance, culture, travel and interviews celebrities. Her investigative work on financial abuse resulted in a number of mortgage prisoners being set free - and a nomination for the Best Personal Finance Story of the Year in the Headlinemoney awards 2021.
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