NS&I has confirmed it will reduce the Premium Bonds prize fund rate from 3.80% to 3.60% starting in August 2024, meaning fewer high-value prizes for savers.
Key Changes to Premium Bonds Payouts
Prize fund rate drops to 3.60% (down from 3.80%)
Odds of winning remain 22,000 to 1
Fewer big prizes:
£100,000 prizes ↘️ 75 (down from 79)
£50,000 prizes ↘️ 151 (down from 159)
£25,000 prizes ↘️ 302 (down from 317)
£10,000 prizes ↘️ 754 (down from 792)
Two £1 million prizes remain unchanged
More small wins: £25 prizes increase to 2.57 million (from 2.2 million)
Why Is NS&I Cutting the Prize Fund Rate?
Andrew Westhead, NS&I Retail Director, said the adjustment “reflects the changing savings landscape” following the Bank of England’s interest rate cut in May.
Sarah Coles, Hargreaves Lansdown, added:
“The writing has been on the wall for Premium Bonds prizes since the BoE rate cut. Savings rates are gradually falling.”
Should You Keep Your Money in Premium Bonds?
Pros
✅ Tax-free prizes (no income or capital gains tax)
✅ Chance to win £1 million (two jackpots monthly)
✅ No risk to capital (backed by HM Treasury)
Cons
❌ Lower returns than top easy-access savings accounts (currently up to 5%)
❌ No guaranteed wins (unlike fixed interest rates)
Laura Suter, AJ Bell:
*”If you want guaranteed returns, compare Premium Bonds to the best easy-access savings accounts (currently paying 5%).”*
Will Premium Bonds Rates Fall Further?
NS&I’s fundraising target increased to £12 billion (may limit further cuts).
But with two more BoE rate cuts expected in 2024, savings rates could keep dropping.
