Premium Bonds prize fund rate cut: What NS&I savers need to know about jackpot and chances of winning

The growth rate of the Premium Bonds prize fund is set to drop from August - but owners are being assured their chances of winning big remain the same, although there will be fewer chances to land some of the draw’s larger pots.

NS&I, which oversees the scheme, is cutting the prize fund rate from 3.8% to 3.6% from the August draw. However, the odds of winning will remain the same - at 22,000/1 - though the changes look set to bring an estimated drop in £100,000 prizes from 79 in June to around 75 in August.

The estimated number of £50,000 prizes will reduce to 151 in August, from 159 in June, while the estimated number of £25,000 prizes will fall to 302 in August, from 317 in June, and there will be an estimated 754 prizes at £10,000 in August, down from 792 in June.

On the flip side, opportunities to win a £25 prize are set to increase in August, with an estimated 2,569,568 available, up from 2,197,831 in June, while £1 million prizes up for grabs remain the same, at two.

Premium Bonds are backed by the Treasury and run by NS&I, which has a duty to balance the interests of savers, taxpayers, and the broader financial services sector.

Andrew Westhead, NS&I retail director, said the adjustment to the prize fund rate “reflects the changing landscape for savings”, and added: “The August draw is expected to deliver more than six million tax-free prizes worth over £396 million.”

Sarah Coles, head of personal finance at accountancy experts Hargreaves Lansdown, said: “The writing has been on the wall for Premium Bond prizes ever since the Bank of England cut interest rates in May. The most competitive easy access savings rates have held up impressively, but the market has been inching gradually south.”

She added: “The question for many savers is whether this will be the last time the rate falls. On the one hand, NS&I’s fundraising target has risen slightly to £12 billion. On the other, at a time when the Bank of England is expected to make two more rate cuts before the end of the year, there’s a decent chance that savings rates will continue to gradually edge lower.”

Laura Suter, director of personal finance at AJ Bell, said: “The top easy access account on the market pays 5% interest.” She added: “Savers with money in Premium Bonds should really think about whether the account is right for them. Considering many Premium Bond holders will never win a prize and the average expected return is lower than the top easy access account, savers could well be better off with a guaranteed return elsewhere.”