Premium Bond prizes cut as NS&I drops interest rates across savings range

Fewer Premium Bonds will win prizes after NS&I announced it was cutting back on payouts.

From 1 May, the odds of winning will drop from 24,500/1 to 26,000/1 – with 173,718 fewer prizes handed out overall.

There will still be two £1million jackpot prizes a month, but every other prize tier will see fewer winners.

Under the new rates, Premium Bond Prize fund will drop from 1.4% of the money invested to 1.3%.

The national savings provider also said it would cut interest on its more traditional savings accounts – with the rate paid on its Direct saver falling from 1% to 0.7%, the investment account rate dropping from 0.8% to 0.6% and income bonds to fall from 1.15% to 0.7%.

People with fixed-term products will see no change the end of their term.

But new, lower, rates for fixed-products will apply once that term ends or to people taking out new ones.

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NS&I chief executive Ian Ackerley said: “Reducing interest rates is always a difficult decision. We need to ensure our interest rates are set at an appropriate position against those of our competitors.

"These changes reflect NS&I’s requirement to strike a balance between the needs of our savers with taxpayers and the stability of the broader financial services sector."

He added: “We believe our new rates offer our customers a fair return and the assurance of the 100% HM Treasury guarantee on all their holdings with NS&I.”

Premium Bonds make major changes to how you can buy them

Here are the new rates in full:

Variable savings products

Direct Saver – 0.70% gross/AER (-30 basis points)
Investment Account – 0.60% gross/AER (-20 basis points)
Income Bonds – 0.70% gross / 0.70% AER (-45 basis points)

Fixed savings products

Guaranteed Growth Bonds (1-year) 1.10% gross/AER (-15 basis points)
Guaranteed Growth Bonds (2-year) 1.20% gross/AER (-25 basis points)
Guaranteed Growth Bonds (3-year) 1.30% gross/AER (-40 basis points)
Guaranteed Growth Bonds (5-year) 1.65% gross/AER (-35 basis points)
Guaranteed Income Bonds (1-year) 1.05% gross / 1.06% AER (-15 basis points)
Guaranteed Income Bonds (2-year) 1.15% gross / 1.16% AER (-25 basis points)
Guaranteed Income Bonds (3-year) 1.25% gross / 1.26% AER (-40 basis points)
Guaranteed Income Bonds (5-year) 1.60% gross / 1.61% AER (-35 basis points)
Fixed Interest Savings Certificates (2-year) 1.15% tax-free/AER (-15 basis points)
Fixed Interest Savings Certificates (5-year) 1.60% tax-free/AER (-30 basis points)

Premium Bond prizes

£1,000,000 – 2
£100,000 – 5 (down 1)
£50,000 – 11 (down 1)
£25,000 – 21 (down 2)
£10,000 – 54 (down 5)
£5,000 – 106 (down 13)
£1,000 – 1,857 (down 127)
£500 – 5,571 (down 381)
£100 – 13,448 (down 13,773)
£50 – 13,448 (down 13,773)
£25 – 3,262,871 (down 145,642)

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