Premium Bond holders are set to have an increased chance of winning prizes following changes announced by National Savings and Investments (NS&I) this week. From September, the prize fund rate will rise from 3.8% to 4.35% a year.
This marks the second increase in two months for the government-backed savings bonds, which are held by 22 million people. The prize fund rate was previously raised from 3.3% to 3.8% in July.
As a result of the latest change, the odds of winning with each £1 bond number will improve from 22,000-1 to 21,000-1. NS&I estimates that the September draw will feature 308,000 more prizes than the August draw, with the total prize pot increasing by approximately £63 million to £497 million.
The changes include a boost in the number of higher-value prizes, while the number of £25 prizes will be trimmed. For instance, the number of £100,000 prizes is projected to increase from 83 to 95, and £50,000 payouts will rise from 165 to 192. Conversely, the number of £25 prizes is being cut from just under 2.3 million to about 1.7 million.
Caitlyn Eastell, an analyst at Moneyfactscompare.co.uk, suggests Premium Bonds may appeal to savers who have used their ISA allowance or are likely to exceed their personal savings allowance. However, she notes that despite improved odds, Premium Bonds remain a game of chance, and the 4.35% figure should not be mistaken for a guaranteed headline rate.