£39m payout increase for Premium Bonds as NS&I’s prize fund charge hits 15-year-high

Jun 21, 2023 at 3:09 AM
£39m payout increase for Premium Bonds as NS&I’s prize fund charge hits 15-year-high

Millions of Premium Bond holders are set for a payout increase after National Savings & Investments upped prize fund charges to a 15-year excessive.

The state-owned financial savings financial institution mentioned the tax-free prize fund for subsequent month’s draw will improve from 3.3 p.c to three.7 p.c.

NS&I mentioned: “The changes will see an additional £39million in prizes available for bondholders.”

With Premium Bonds, there isn’t a curiosity earned on the cash invested. Instead the rate of interest funds the draw for prizes.

NS&I on Tuesday mentioned there might be extra probabilities for bondholders to win prizes of between £50 and £100,000, however the variety of £25 winners is estimated to stoop from greater than 2.1 million to 1.5 million.

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The transfer comes with elevated financial savings charges throughout the market – one flipside to the sequence of Bank of England charge hikes which have hit many debtors exhausting. NS&I mentioned modifications had been to make sure merchandise “are priced appropriately when compared to the rest of the ­savings market”.

The Government has additionally given NS&I the duty of elevating £7.5billion this monetary 12 months. Around 22.4 million folks personal Premium Bonds.

Dax Harkins, NS&I chief government, mentioned: “This is now the sixth prize fund rate increase for Premium Bonds in just over a year, making it the highest it’s been in over 15 years. With the changes, we’re expecting to pay out more than £374million to winners in July with more higher-value prizes, meaning that, each month, more lives will be changed by Premium Bonds.”

NS&I estimates there might be 71 prizes of £100,000 every in July’s draw, in contrast with 63 this month, plus 141 £50,000 payouts – 16 extra.

There needs to be extra going all the best way down the prize tiers, other than the decrease £25 stage.

NS&I has additionally elevated the rate of interest for younger savers holding its junior ISA from 3.4 p.c to three.65 p.c, serving to greater than 89,000 under-18s.

Myron Jobson, of Interactive Investor, urged savers to think about easy-access accounts, the place some charges have risen to 4 p.c.