Premium Bonds savers may want to compare rates (Image: Getty)
Premium Bonds savers may be weighing up their options afresh as key changes to the scheme come in next month. From the April draw, the prize fund rate will be falling, as well as the odds of winning for each £1 Bond.
The prize rate will drop from the current 3.6 percent down to 3.3 percent, while the odds of bagging a prize for each £1 Bond that goes into the monthly draw will be slashed from 22,000 to one to 23,000 to one. NS&I cut the prize rate three times in 2025, while the odd of winning last went down in December 2024.
Michele Teighi, financial expert and founder at investing platform psyfi money, reminded savers that there is no guarantee you will win a prize in the monthly draw. He said: “Premium Bonds don’t offer a guaranteed return on investment.”
The money specialist said the looming rate cut may persuade customers to look elsewhere: “This might convince some people to cash in their Premium Bonds for a more consistent investment, such as a cash ISA.” You can hold up to £50,000 in Premium Bonds, and the more Bonds you hold, the better your chance of taking home a win.
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However, Mr Tieghi warned that if you have a small amount invested, your odds of wining are “quite low” and with the April changes will “only decrease further”. Even if you do win a prize, the vast majority of these are for small amounts such as £25 or £50.
You may do better than this by putting your Bonds into cash savings. For example, you can get interest rates of 4.5 percent or more at the moment in cash savings. If you put the full £50,000 into an account paying 4.5 percent, you would earn £2,250 a year in interest.
The investment expert also said it may be worth thinking about cashing in your Bonds even if you have had some luck in the prize draw recently. He said: “It’s important to remember that each monthly draw is completely independent, so even if you’ve had some recent wins, this doesn’t change future odds.
“Winning is great, but it doesn’t increase your chances going forward; it shouldn’t influence your decision.” Mr Tieghi said with the rate cut just weeks away, now is a good time to think about diversifying your savings.
He said: “Your chances of winning decrease from April. So, cashing in at the end of March, and investing in an alternative method which will offer you a greater return on investment would be beneficial.
“Consider switching your money from Premium Bonds to a Cash ISA with an interest rate above 3.3 per cent. As youll be earning guaranteed income each month, while statistically earning more than what you would expect to earn if you kept your money in Premium Bonds.”
For example, if you had £10,000 held in Premium Bonds, if you moved this over to a cash ISA paying 4 percent, you would earn £400 in interest over a year. There are always two £1million jackpot prizes in each Premium Bonds draw.
In the March draw, one of the jackpots was won by a saver from Liverpool while the other one went to a saver from Norfolk. They both held the maximum £50,000 in Bonds, as have all the £1million winners so far this year.
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