National Savings and Investments (NS&I) Premium Bonds savers have been warned to expect fluctuations as prize changes come into effect. Over 22 million Premium Bonds holders will see the prize fund rate increase to 3.80% from the July 2026 draw. At the same time, holders will have even more chances to win, with the odds shortening to 22,000 to 1 from 23,000 to 1. The Premium Bonds prize fund rate was reduced in April 2026 along with the odds lengthening.
Expert Advice on Savings Strategy
Jennifer Crichton, senior wealth planner at wealth management group Killik & Co, said: "The prize fund rate for Premium Bonds is variable and broadly tracks the Bank of England rate, so as interest rates have come down, the effective rate on offer has followed, and savers should expect fluctuations."
Ms Crichton added: "Savers who rely heavily on Premium Bonds as a primary savings vehicle shouldn't assume prize fund rates will remain the same, and building a broader savings plan is a sensible approach."
Three Savings Pots Strategy
Ms Crichton outlined a three-pot savings strategy. The first pot is an emergency fund, typically covering three to six months of essential outgoings, held in cash for immediate access. Premium Bonds can sit in this pot as they are Government-backed and can be accessed upon request.
The second pot covers near-term goals, money that likely needs accessing within the next three to five years for foreseeable costs, such as larger payments or planned purchases.
Increased Prize Opportunities
Compared to the May 2026 draw, it is estimated that there will be 322,000 extra prizes in the July draw, with the prize pot increasing by over £60 million. In July, there are expected to be 12 additional £100,000 prizes, 24 more £50,000 prizes, and an extra 49 £25,000 prizes.
Long-Term Savings
Ms Crichton said: "The third savings pot is for the long term, so money that you do not expect to need for at least five years. Investing is likely to be the best option to grow this pot and protect from the effects of inflation."
She recommended Stocks and Shares ISAs as a tax-efficient option for this third pot, benefiting from tax-free growth and withdrawals. However, all investing comes with risks. Keeping those three pots distinct is important to ensure long-term savings can work harder for longer, while Premium Bonds remain a liquid, low-risk aspect of an overall savings plan.
