Premium Bonds cuts prize price once more – are they nonetheless value it?

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Your help makes all of the distinction. Learn extra The prize price for Premium Bonds is about to be minimize in August, Nationwide Financial savings and Investments (NS&I) has confirmed, bringing adjustments for tens of millions of account holders.

The prize fund will shrink to three.6 per cent from August’s draw, down from 3.8 per cent. It marks the third price discount of the yr, after it was minimize from 4.15 per cent to 4 per cent for January.

Whereas the percentages of successful will stay the identical, the minimize means the estimated variety of prizes up for grabs has been lowered once more.

Premium Bonds are an funding product supplied by the government-owned NS&I. It offers savers with a novel alternative to win tax-free money prizes starting from £25 to £1 million every month.

<img src="https://static.independent.co.uk/2023/06/30/16/88b85ca917c0dd43581bc781a57d7c04Y29udGVudHNlYXJjaGFwaSwxNjg4MjIzODgz-2.30020024.jpg" srcset="https://static.independent.co.uk/2023/06/30/16/88b85ca917c0dd43581bc781a57d7c04Y29udGVudHNlYXJjaGFwaSwxNjg4MjIzODgz-2.30020024.jpg?quality=75&width=320&auto=webp 320w, https://static.independent.co.uk/2023/06/30/16/88b85ca917c0dd43581bc781a57d7c04Y29udGVudHNlYXJjaGFwaSwxNjg4MjIzODgz-2.30020024.jpg?quality=75&width=640&auto=webp 640w" loading="lazy" alt="The prize rate for Premium Bonds is set to be cut in August" class="sc-1mc30lb-0 ggpMaE inline-gallery-btn"/> open picture in gallery

The prize price for Premium Bonds is about to be minimize in August (PA Media) Not like conventional financial savings accounts, Premium Bonds don't accrue curiosity. As a substitute, the returns come solely from these prize attracts. The minimal funding is £25, with a most holding of £50,000.

The newest prize price minimize now signifies that there can be an estimated 75 prizes of £100,000, down from 79. In the meantime, the variety of £50,000 prizes can be decreased to 151 from 159.

The variety of £25,000 prizes will fall to 302 from 317, and £10,000 prizes to 754 from 792. Nevertheless, the variety of £1 million prizes will stay the identical, at two.

The variety of £25 prizes can also be set to extend for August’s draw, with an estimated 2.56 million obtainable, up from 2.19 million.

The financial savings held in Premium Bonds don’t accrue curiosity as with common financial institution accounts. This has led some specialists to query how viable they're for savers seeking to maximise the returns on their cash, particularly in gentle of the consecutive prize price cuts.

<img src="https://static.independent.co.uk/2025/05/21/2/57/Martin-Lewis-gives-car-finance-claim-deadline-update.png" srcset="https://static.independent.co.uk/2025/05/21/2/57/Martin-Lewis-gives-car-finance-claim-deadline-update.png?quality=75&width=320&crop=3%3A2%2Csmart&trim=0%2C79%2C0%2C78&auto=webp 320w, https://static.independent.co.uk/2025/05/21/2/57/Martin-Lewis-gives-car-finance-claim-deadline-update.png?quality=75&width=640&crop=3%3A2%2Csmart&trim=0%2C79%2C0%2C78&auto=webp 640w" loading="lazy" alt="Martin Lewis’s Money Saving Expert site says the latest cut makes Premium Bonds ‘even easier to beat elsewhere’" class="sc-1mc30lb-0 ggpMaE inline-gallery-btn"/> open picture in gallery

Martin Lewis’s Cash Saving Professional website says the most recent minimize makes Premium Bonds ‘even simpler to beat elsewhere’ (ITV) Evaluation from Martin Lewis’s Cash Saving Professional website says the most recent minimize makes Premium Bonds “even simpler to beat elsewhere”.

It says: “For many savers with common luck, accounts that pay curiosity will now be much more more likely to beat Premium Bonds. It's because financial savings curiosity is a assured return.”

Latest analysis from Octopus Cash additionally discovered that Premium Bond holders are ready a mean of three.5 years to win a single prize. And in 9 out of ten of those instances, this prize is value lower than £2,000.

Because of this for many savers, a daily financial savings account is the almost certainly avenue to yield assured returns, with probably the most aggressive choices presently providing round 4.75 per cent curiosity.

An alternative choice is to open a money ISA, a financial savings account which permits tax-free deposits of as much as £20,000 a yr. Like Premium Bonds, a money ISA can compete as a tax-free choice, but additionally pays a daily and assured rate of interest.

Andrew Westhead, NS&I retail director, stated: “This adjustment to the Premium Bonds prize fund price – the primary in 4 months – displays the altering panorama for financial savings.

“Premium Bonds preserve their distinctive enchantment by providing full safety backed by HM Treasury, the pliability to withdraw simply, and the thrill of doubtless successful a tax-free prize every month. The August draw is predicted to ship greater than 6 million tax-free prizes value over £396 million.”