NS&I Raises Premium Bond Prize Fund Rate to 4.35%

National Savings and Investments increased the premium bond prize fund rate from 3.8 percent to 4.35 percent per year, effective from the September draw. This represents the second rate hike in two months, following a previous increase from 3.3 percent to 3.8 percent in July.

The rate change improves the odds of winning for each £1 bond from 22,000-1 to 21,000-1 and expands the total prize pot by approximately £63 million to a total of £497 million. The organization is also adjusting the distribution of prizes by increasing the number of higher-value payouts, including £50,000 and £100,000 prizes, while reducing the number of £25 prizes from roughly 2.3 million to 1.7 million.

While the bonds provide tax-free winnings, they offer no guaranteed interest, which leaves holders vulnerable to inflation. The bonds may see increased appeal as cash Isa allowances for individuals under 65 will be capped at £12,000 starting April 6, 2027.