NS&I is making some changes to Premium Bonds (Image: Getty)
Premium Bonds savers frustrated to learn NS&I is cutting the prize fund rate soon have been urged to consider another looming savings rule cut. You can win big prizes in the monthly prize draw, such as for £50,000, £100,000, or one of the £1million jackpots, or you could go months or even years without taking home anything.
NS&I has announced that it will soon be reducing both the prize rate and the odds of winning for the scheme. From the April 2026 draw, the prize rate will fall from 3.6 per cent to 3.3 per cent, while the odds of winning for each £1 Bond will fall from 22,000 to one to 23,000 to one.
The dwindling chances of winning a big prize may cause some customers to consider switching to other savings options. Michele Tieghi, financial expert and founder of psyfi money, spoke about who Premium Bonds may still suit as a savings vehicle.
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He said: “Premium Bonds offer a safe investment, as you can’t lose money. It’s also great for those who might need quick access to their cash, as you can take your money out of Premium Bonds at any time. However, the downside to Premium Bonds is that there is no guaranteed income.”
Customers thinking of cashing in their Bonds may want to factor in another looming savings change. As announced in the Autumn Budget 2025, from April 2027 the ISA allowance will be tightened. You can currently save up to £20,000 a year divided as you wish between cash ISAs and stocks and shares ISAs.
But under the new rules, you will only be able to deposit up to £12,000 as you decide, while the remaining £8,000 will have to be used for investment-based accounts. Over-65s will be exempt from the new rules and will keep the current allowance.
If you decided to put £20,000 into Premium Bonds you would win between £600 and £900 a year in prizes on average, Mr Tieghi said. You can currently get rates of up to 4.4 percent with easy access cash ISAs. If you put the current £20,000 ISA allowance into an account at this rate, you would earn £880 a year in interest, although interest rates are predicted to continue to fall this year.
Mr Tieghi spoke about how the changes to the ISA allowance could affect savings trends. He said: “The new cash ISA limit in 2027 could cause more people to put their money into Premium Bonds.
“If they previously invested £20,000, and they’re quite a safe investor, then they will be keen to look at risk-free alternatives. Premium Bonds will offer exactly that, even if the return on investment will likely be less.
“It could be a case of £12,000 being put in a cash ISA, and £8,000 being put into Premium Bonds. But the efficiency of investing in Premium Bonds could further reduce this year, especially if the Bank of England cuts interest rates further.” He warned that if there are further cuts to the prize rate this year, it could fall to the 2.5 percent to 3 percent range.
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