Premium Bond savers are set for even higher payouts after National Savings & Investments (NS&I) raised its prize fund to three.3 per cent ranging from its draw subsequent month.

The change to the Premium Bonds prize fund rate is the fifth improve that NS&I has made within the final 12 months and the third rise in 2023 alone.

NS&I elevated the rate from 2.2 to three per cent on 1 January, and this month the prize fund rate rose again to three.15 per cent for attracts made in February.

Savings lottery: Premium Bonds offer an average prize fund rate of return that has now risen to 3.3% - a level that beats most easy access savings deals.

Savings lottery: Premium Bonds supply a mean prize fund rate of return that has now risen to three.3% – a stage that beats most quick access financial savings offers.

At its present rate of three.3 per cent, the chances of every £1 Bond profitable a prize will stay at 24,000 to 1, however the modifications imply that the variety of prizes price £50 to £100,000 will improve from the March draw. 

For instance, there’ll now be 62 prizes price £100k, up from 59 this month and the variety of £50,000 prizes will rise from 117 to 123 in March.

The Premium Bond prize fund rate now beats all however one quick access financial savings account, Yorkshire Building Society’s Rainy Day Saver account at 3.35 per cent. 

But the YBS account comes with extreme restrictions, together with solely paying that rate as much as £5,000 and permitting withdrawals solely two days a 12 months – on the anniversary of opening it or the day of closure.

In an extra Valentine’s Day increase for individuals’s financial savings pots, NS&I additionally annunced hikes for Direct Saver and Income Bonds clients. 

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From right now, they’ll see their rates of interest improve to 2.85 per cent, up from 2.6 per cent.

Ian Ackerley, chief govt at NS&I stated: ‘Premium Bonds are one of many nation’s most liked methods to avoid wasting, giving individuals the month-to-month anticipation of a possible win whereas figuring out their cash is 100 per cent secure. 

‘We’re additionally giving a Valentine’s Day increase to our Direct Saver and Income Bonds clients who will see their rates of interest rise from right now.

‘We are dedicated to making sure our merchandise stay enticing and our clients can proceed to avoid wasting with confidence. 

‘Today’s modifications imply that we proceed to stability the pursuits of savers, taxpayers and the broader monetary providers sector.’

Change within the variety of Premium Bond prizes 
Current prize fund rate (to February 2023) Current odds (to February 2023) New prize fund rate (from March 2023) Odds from March 2023 (no change)
3.15% tax-free 24,000 to 1 3.30% tax-free 24,000 to 1
Value of prizes in February 2023 Number of prizes in February 2023 Value of prizes in March 2023 (estimated) Number of prizes in March 2023 (estimated)
£1,000,000 2 £1,000,000 2
£100,000 59 £100,000 62
£50,000 117 £50,000 123
£25,000 236 £25,000 248
£10,000 590 £10,000 620
£5,000 1,177 £5,000 1,236
£1,000 12,573 £1,000 13,173
£500 37,719 £500 39,519
£100 1,280,509 £100 1,400,876
£50 1,280,509 £50 1,400,876
£25 2,376,161 £25 2,132,917
Total Total Total Total
£314,347,875 4,989,652 £329,316,825 4,989,652

Are Premium Bonds one of the best place for straightforward entry financial savings?

The common rate of return on Premium Bonds has significantly improved over the previous 12 months. At the beginning of 2022, they paid simply 1 per cent, that climbed to 1.4 per cent in June after which 2.2 per cent in October, adopted by the three successive rises to this point this 12 months.

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With the prize fund rate at the moment standing at 3.3 per cent, in comparison with the highest easy-access offers and Premium Bonds are wanting very enticing. 

– Check out This is Money’s greatest financial savings rate tables right here.

The Premium Bonds rate of return beats one of the best no strings hooked up quick access financial savings deal and comes inside a whisker of the highest one.

The greatest easy-access deal is provided by Yorkshire Building Society paying 3.35 per cent, albeit solely as much as £5,000 while solely permitting two withdrawals per 12 months.

Premium Bonds Winners

Prize Area Value of bond
£1,000,000 Sefton £5,000
£1,000,000 Sheffield £2,000
£100,000 Lancashire £30,000
£100,000 West Midlands £5,000
£100,000 Staffordshire £36,825
£100,000 South Gloucestershire £14,000
£100,000 Essex £39,000
£100,000 East Riding of Yorkshire £49,750

More February 2023 winners

View listing of February 2023 winners

But there are two questions it is advisable ask: Are Premium Bonds quick access and the way possible am I to get that common rate of return?

Premium Bonds come as shut as you may get with out being genuinely immediate entry. As our response to a current reader query defined, it could take a few days to get your cash out of Premium Bonds.

Instant entry financial savings accounts are the best house to your wet day cash, which you will have to get an shortly if an emergency hits. However, many people might get via a few days earlier than we obtained our arms on our financial savings.

Ultimately, it is as much as you and your circumstances as as to if Premium Bonds move the take a look at.

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The subsequent query is extra difficult: will you get the typical rate of return? That relies on luck, after all, and in a fortunate 12 months it’s possible you’ll do a lot better than the quoted 3.3 per cent, whereas in an unfortunate 12 months you possibly can do a lot worse.

However, there is one other level to notice right here and that requires a faculty maths recap: the Premium Bond prize fund rate is a imply common, reflecting the overall quantity paid out in prizes to everybody in comparison with the quantity held throughout all bonds.

The drawback with this, as with any imply common, is that it may be skewed by the large and small numbers at both finish or any uneven numbers. As Premium Bonds pay out a collection of completely different sized prizes starting from £25 to £1,000,000, any given particular person will not get the imply common return.

You can learn extra from the This is Money editor right here: Simon Lambert: Premium Bonds could now be one of the best place for wet day financial savings

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