The prize rate for Premium Bonds has increased to 4.35%. This follows a previous adjustment in April, when the rate decreased from 3.6% to 3.3%.
Michael Tomlinson, a Which? money expert, noted that returns are not guaranteed with Premium Bonds. However, holding the maximum amount of Premium Bonds makes the chance of winning at least one prize a year almost certain.
For higher-rate taxpayers who have already used their ISA allowance, Premium Bonds can be particularly beneficial. This is because prizes are tax-free, unlike interest from non-ISA savings accounts which is taxed above the personal savings allowance.