A change from NS&I could be goods news for Premium Bonds savers concerned about the dwindling prize fund rate. Provider NS&I has axed the prize fund rate for Premium Bonds three times in 2025, with the prize fund rate now sitting at 3.6 per cent.
This follows rate cuts in January, April and August. The odds of winning for any £1 Bond that goes into the monthly draw is currently at 22,000 to one.
Savers may be wondering where the prize rate will move next, as one factor that can affect where NS&I sets it is the base interest rate. The base rate is currently at 4 per cent, having been held at this level in the Bank of England’s past two decisions.
Another consideration for state-owned NS&I is its net financing target, which is the amount the Government seeks to take in through NS&I’s various savings products. The target for the 2025/2026 tax year has just been increased from £12billion to £13billion.
This is good news for Bond holders as this means NS&I is less likely to drop the prize fund rate further in the coming months, as it will be looking to attract new customers. NS&I achieved just £3.9billion in net financing in the first half of the financial year, from April to September, so it has its work cut out to hit the £13billion target.
Nonetheless, the second half of the year is generally when there is more activity. In its efforts to attract news customers, the provider increased the rates across its fixed-rate British Savings Bonds in November 2025, and it also increased its rates in July.
NS&I chief executive Dax Harkins, said: “Our pricing is designed to meet this revised target and maintain market stability, and we expect our performance to continue steadily through the second half of the financial year.”
Premium Bonds rate may hold steady
Mark Hicks, head of Active Savings at pension and savings provider Hargreaves Lansdown, said the Premium Bond prize rate “may hold steady” despite rates falling in the wider savings market.
Welcoming the news of the increased financing target, he said: “This will provide real hope for bondholders. They can also draw strength from the fact the savings market is so competitive at the moment, and news about the cut to the cash ISA limit is likely to mean ISA rates in particular remain stronger for a while.
“If this pushes NS&I rates down the best-buy tables, it could mean slower fundraising, which would push Premium Bonds up the agenda.” Chancellor Rachel Reeves announced in the Autumn Budget that a new limit on deposits into cash ISAs will be brought in from April 2027, of £12,000 a year.
You can currently deposit up to £20,000 a year into the tax-free accounts, which can be divided between cash ISAs and stocks and shares ISA accounts. You will get a £20,000 allowance under the new rules, but £8,000 of it can only be used for stocks and shares ISAs. The new rules will not apply to over-65s, who will keep the current allowance.
Mr Hicks also warned that there are no guarantees the prize rate will remain at its current level. In fact, there could soon be another cut in the base rate.
Mr Hicks said: “Given the fact a Bank of England rate cut is expected in December, and rates are expected to trend downwards from here, we may see banks lower their savings deals in 2026, so there will be pressure on the prize rate to fall.
“We will need to wait and see whether the need for fundraising trumps this in the coming months.” He also encouraged Bond holders to think through if the savings scheme is the right place for their cash.
Mr Hicks said: “In an average month, the average bondholder with average luck will win nothing. Some people will feel this is worth it for the outside chance of winning a lifechanging sum of money.
“Others, however, will prefer the certainty of a savings account or cash ISA – particularly while the rates from online banks and cash savings platforms are so good.”