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Premium bonds: odds on winning prize set to lengthen Premium bonds: odds on winning prize set to lengthen
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Bad news if you're one of Britain's 21.5 million premium bond holders: you are now less likely to win a prize. The odds of winning a prize for Britain's 21.5 million premium bond holders have worsened, after changes reduced the prize fund.
National Savings & Investments (NS&I) is reducing the premium bond "prize-fund rate" – the proportion of the total invested amount paid out in prizes – from 1.5% to 1.3% a year from 1 August 2013. National Savings & Investments (NS&I) said on Tuesday it was cutting the proportion of the total invested amount paid out in prizes from 1.5% to 1.3% a year from 1 August 2013.
As a result, the odds of winning a prize with each £1 bond number will lengthen – from 24,000-1 to 26,000-1. As a result, the odds of winning with each £1 bond number will lengthen – from 24,000-1 to 26,000-1.
While the total value of prizes in July 2013 was £57m, in August it is estimated this will fall to £49m. This includes three £100,000 prizes – down from five in July – and 11,891 £100 prizes – down from 33,552. While the total value of prizes this month was £57m, it is estimated this will fall next month to £49m. This includes three £100,000 prizes – down from five in July – and 11,891 £100 prizes – down from 33,552.
The move will come as a blow to many long-suffering savers, some of whom have turned to NS&I products such as premium bonds as an alternative to traditional savings accounts offering paltry interest rates.The move will come as a blow to many long-suffering savers, some of whom have turned to NS&I products such as premium bonds as an alternative to traditional savings accounts offering paltry interest rates.
NS&I said it aimed to set the prize fund rate in a way that balanced the interests of savers, taxpayers and the stability of the broader financial services sector. NS&I said it aimed to set the prize fund rate in a way that balanced the interests of savers, taxpayers and the stability of the broader financial services sector. A spokesman said: "Interest rates have fallen over recent months in the savings sector, resulting in NS&I savings being increasingly competitive. The reduction in the premium bond prize fund rate reflects current lower interest rates across the savings market."
"Interest rates have fallen over recent months in the savings sector, resulting in NS&I savings being increasingly competitive. The reduction in the premium bond prize fund rate reflects current lower interest rates across the savings market," added a spokesman. In June NS&I announced it would reduce interest rates on its income bonds, Direct Saver and Direct Isa with effect from 12 September.
In June NS&I announced it was reducing the interest rates on its income bonds, Direct Saver and Direct Isa with effect from 12 September 2013.
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