National Savings and Investments (NS&I) has issued a warning to all 22 million Premium Bonds holders ahead of a rule change. The popular savings product, which holds £1 bonds entered into a monthly prize draw, is often misunderstood, according to personal finance experts.
Expert Warning on Premium Bonds
Andrew Hagger, founder of MoneyComms, explained: "Simple mathematics mean the larger your holding, the greater your chance of winning but there are no guarantees that you'll win anything." He added that most bond holders realise their chance of winning one of the two monthly £1 million jackpot prizes is quite remote.
Anna Bowes, savings expert at Private Office, echoed this sentiment: "If you do depend on the interest from your savings, you cannot depend on Premium Bonds." She noted that while the chance of winning is less for smaller holdings, someone always wins, which is the appeal.
Prize Fund Rate Increase
The variable annual prize fund rate for the July 2026 draw will increase to 3.80%, with odds of 22,000 to 1 for any £1 bond to win a prize. Prizes range from £25 to £1 million, with two £1 million prizes each month since April 1994.
Andrew Westhead, NS&I Retail Director, stated: "We regularly review our products to ensure they reflect current market conditions, and we're pleased to be able to improve rates across five variable savings accounts today." He highlighted that Premium Bonds offer tax-free prizes, 100% security backed by HM Treasury, and withdrawal flexibility.
Holders are advised to understand that while Premium Bonds provide excitement and security, they should not be relied upon for consistent returns.
