Ns&i Premium Bonds Rate Change: Prize Fund Falls to 3.3% and Odds Drop to 1 in 23,000
NS&I will reduce the Premium Bond annual prize-fund rate to 3. 3% from 3. 6% for the April draw and subsequent months, and the odds of any single bond winning will fall from 1 in 22, 000 to 1 in 23, 000. The move tightens the gap between prize-based returns and guaranteed interest rates at a time when many savers are weighing where to hold cash.
Ns&i Premium Bonds Rate Change and the April draw
The prize-fund rate will drop to 3. 3% for the April draw and beyond, down from 3. 6%. The odds of a single bond winning a prize — which have been unchanged since December 2024 — will move from 1 in 22, 000 to 1 in 23, 000. This cut follows a sequence of reductions over the previous year that took the prize-fund rate from 4% in January to 3. 6% by August.
How the change affects returns and typical savers
Most people with average luck will receive considerably less than the headline prize-fund rate, whether it was 3. 6% or the new 3. 3%, even with the maximum £50, 000 invested. Premium Bonds replace guaranteed interest with tax-free monthly prizes ranging from £25 to £1 million, and the annual prize-fund rate is only a benchmark of the "average" return you might expect rather than a guaranteed yield.
For savers who prefer certainty, standard savings accounts can now be more attractive: a top easy-access non-ISA rate of 4. 5% yields £45 of interest a year for every £1, 000 saved, a guaranteed return that many investors will beat with certainty, while many people saving the same £1, 000 in Premium Bonds may win nothing.
Tax treatment, allowances and where Premium Bonds fit
Interest from normal savings is taxable as income, but each tax year savers benefit from a personal savings allowance (PSA). Basic-rate (20%) taxpayers do not pay tax on the first £1, 000 of interest a year; higher-rate (40%) taxpayers do not pay tax on the first £500 a year; top (45%) rate taxpayers pay tax on all interest. At today's top standard easy-access rate of 4. 5%, it takes just over £22, 222 in savings for a basic-rate taxpayer to exceed the PSA and start paying tax on interest, and just over £11, 111 for a higher-rate taxpayer.
Premium Bond prizes are tax-free. That means for people with larger cash holdings who have already used their £20, 000 a year ISA allowance and who would otherwise exceed the PSA, Premium Bonds can be a reasonable option — provided they accept the randomness of returns and the negligible chance of winning the £1 million top prize. For others, cash ISAs remain likely to be the better choice: the top easy-access cash ISA rate is currently 4. 4%, slightly lower than the standard non-ISA top rate but tax-free and offering a guaranteed return that is higher than the current Premium Bond prize-fund rate.
Historical context: cuts through the year
The latest reduction continues a downward trend that began in January, when the prize-fund rate stood at 4%. By August it had dropped to 3. 6%, and the move to 3. 3% takes the rate even further below many headline savings rates. That pattern of gradual reductions reflects adjustments to the prize fund over the course of the year and changes in the wider savings market.
Practical implications and user notices
Investors who value predictability should note that guaranteed interest accounts will now be even more likely to outperform Premium Bonds for most savers with average luck. Many people expect to receive the headline prize rate or close to it with a small chance of a jackpot, but the reality is that typical returns will be lower and the chance of winning the £1 million prize is negligible.
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What makes this notable is the combination of a lower headline prize-fund rate and slightly worse odds: together they narrow the appeal of prize-based saving at the exact moment guaranteed cash rates are higher and tax considerations (PSA thresholds and ISA allowances) may shift the balance for savers deciding where to keep their cash.
