Ns&i Premium Bonds Rate Change brings prize-fund cut to 3.3% from April
The ns&i premium bonds rate change will see NS&I lower the Premium Bond annual prize‑fund rate to 3. 3% from 3. 6% for the April draw and beyond, a move that reduces both the headline return and the odds of winning for existing holders.
Ns&i Premium Bonds Rate Change: prize fund drops to 3. 3%
NS&I will reduce the annual prize‑fund rate from 3. 6% to 3. 3% for the April draw and beyond; the prize‑fund rate is the nearest thing Premium Bonds have to an interest rate and serves as a benchmark of the "average" return. The prize‑fund rate has already been cut several times: it fell from 4% in January to 3. 6% by August last year before this latest move to 3. 3%.
Odds of winning edged down to 1 in 23, 000
The odds of any single bond winning a prize, which had been the same since December 2024, will fall slightly from 1 in 22, 000 to 1 in 23, 000. Even with the maximum £50, 000 invested, most people with typical luck are unlikely to achieve the headline prize‑fund rate of 3. 6% or the new 3. 3%.
How the cut compares with standard savings rates
The 3. 3% prize‑fund rate already lagged behind standard savings rates, and the new cut widens that gap in concrete terms. With today's top standard (non‑ISA) easy‑access rate of 4. 5%, a saver would receive £45 in interest a year for every £1, 000 saved. The top easy‑access cash ISA rate is 4. 4%, slightly lower than the non‑ISA rate but tax‑free and offering a guaranteed return that is higher than the current Premium Bond prize rate of 3. 6% and the new 3. 3%.
Tax rules and when Premium Bonds can make sense
Normal savings interest is taxable as income, but each tax year savers get a personal savings allowance (PSA): basic 20% rate taxpayers don't pay tax on the first £1, 000 of interest, higher 40% rate taxpayers don't pay tax on the first £500, and top 45% rate taxpayers pay tax on all interest. At a 4. 5% interest rate it takes just over £22, 222 in savings for basic‑rate taxpayers to exceed the PSA and start paying tax on interest, and just over £11, 111 for higher‑rate taxpayers.
Premium Bond prizes are not taxed. That means if you hold larger cash savings, have already used a £20, 000 a year ISA allowance and expect to earn enough interest to exceed your PSA, Premium Bonds may be a reasonable option—provided you accept the random nature of returns rather than a guaranteed interest payment.
Prizes, the draw and what savers should know
Premium Bonds replace paid interest with tax‑free prizes awarded in a monthly draw; prizes range from £25 to £1 million. Many people assume they are likely to get the headline prize rate and perhaps a small chance of a big win, but the reality is different: you are likely to get quite a lot less than the headline rate and the chance of winning the top prize is negligible. Despite that, many savers still keep cash in Premium Bonds even though the prize‑fund rate lags standard savings.
The next confirmed milestone is the April draw, when NS&I will apply the new 3. 3% prize‑fund rate and the adjusted odds of 1 in 23, 000. Savers who want a guaranteed return can compare the current 4. 5% non‑ISA and 4. 4% cash ISA easy‑access rates with the new Premium Bond benchmark before deciding whether to move funds or keep them in the monthly prize draw.
