Ns&i Premium Bonds Rate Change hits prize fund and odds — are they still worth it?
NS&I will cut its Premium Bond prize-fund rate to 3. 3% from 3. 6% for the April draw and beyond — a ns&i premium bonds rate change that also reduces the chance of winning a prize and sharpens comparisons with standard savings.
Ns&i Premium Bonds Rate Change: rate and odds
The prize-fund rate is being reduced from 3. 6% to 3. 3% for the April draw and beyond, and the odds of any single bond winning are falling from 1 in 22, 000 to 1 in 23, 000. The odds had been the same since December 2024, and this latest cut follows a series of reductions last year that took the prize-fund rate from 4% in January to 3. 6% by August.
How the figures compare with easy-access savings
For most savers with average luck, accounts that pay interest will now be even more likely to beat Premium Bonds. Today's top easy-access rate of 4. 5% would pay £45 in interest a year for every £1, 000 saved, a guaranteed return; by contrast Premium Bonds pay a monthly draw where many saving the same £1, 000 would win nothing.
Tax rules and thresholds that change the choice
Premium Bond prizes aren't taxed, which matters if you have larger cash savings. Normal savings interest is taxable as income but benefits from the personal savings allowance (PSA): basic 20% rate taxpayers don't pay tax on the first £1, 000 a year of interest, higher 40% rate taxpayers don't pay tax on the first £500 a year of interest, and top 45% rate taxpayers pay tax on all interest.
Using today's top standard (non-ISA) easy-access rate of 4. 5%, it takes just over £22, 222 in savings for basic-rate taxpayers to exceed the PSA and start paying tax on the interest, and just over £11, 111 for higher-rate taxpayers. If you've maxed out your £20, 000 a year ISA allowance and earn enough interest to exceed your PSA, Premium Bonds are probably a decent choice — if you can accept the random nature of the 'interest'.
Prizes, caps and what savers should bear in mind
Premium Bonds operate like a savings account that pays tax-free prizes in a monthly draw rather than interest; prizes range from £25 to £1 million. The nearest thing Premium Bonds have to an interest rate is the annual prize-fund rate, which is decreasing from 3. 6% to 3. 3% in April and acts as a benchmark for the "average" return — though most people with typical luck won't get a return of 3. 6% or 3. 3%, even with the maximum £50, 000 invested, and the chance of winning a million is negligible.
Choices for savers and next steps
For savers who accept that returns are random rather than guaranteed, investing in Premium Bonds isn't a bad plan; for everyone else, cash ISAs — with a top easy-access cash ISA rate currently 4. 4% — are likely the better choice because they pay a guaranteed, tax-free return that is higher than the current headline Premium Bond prize rate of 3. 6% (which you need to be lucky to achieve). A ns&i premium bonds rate change that reduces both prize rate and odds pushes more typical savers toward interest-paying accounts.
The change takes effect for the April draw and beyond; the April draw is the next confirmed milestone for the prize-fund rate and odds adjustments.
