Martin Lewis’ MoneySavingExpert.com team has discussed the continued value of Premium Bonds following NS&I’s announcement of a reduction in its prize fund rate. Premium Bonds, a type of savings product, function differently from traditional savings accounts as they offer the chance to win prizes in a monthly draw rather than a fixed interest rate. The prizes range from £25 to £1 million, with a higher frequency of smaller prize amounts compared to larger ones.
NS&I recently confirmed a decrease in the Premium Bonds prize fund rate from 3.6% to 3.3% starting from the April 2026 draw. This change affects the likelihood of winning a prize, with the odds shifting from 1 in 22,000 to 1 in 23,000 for each individual bond.
According to the MoneySavingExpert.com team, the latest rate cut makes Premium Bonds less competitive compared to other savings options. They suggest that for individuals with average luck, accounts offering interest are now more likely to provide better returns than Premium Bonds. Savings accounts guarantee a fixed return, such as earning £45 in interest annually for every £1,000 saved at a top easy-access rate of 4.5%, offering more certainty than Premium Bonds where some may win nothing.
The team emphasized that most savers are expected to receive returns lower than the prize fund rate, reducing their chances of winning the top £1 million prize. They concluded that investing in Premium Bonds may not be the most lucrative option for those seeking consistent returns.