{"id":1654,"date":"2024-11-29T07:40:33","date_gmt":"2024-11-29T07:40:33","guid":{"rendered":"https:\/\/www.redstarwealth.co.uk\/blog\/?p=1654"},"modified":"2024-11-28T17:26:15","modified_gmt":"2024-11-28T17:26:15","slug":"premium-bonds-prize-fund-rate-cut-to-4","status":"publish","type":"post","link":"https:\/\/www.redstarwealth.co.uk\/blog\/premium-bonds-prize-fund-rate-cut-to-4\/","title":{"rendered":"Premium Bonds Prize-Fund Rate Cut to 4%"},"content":{"rendered":"

National Savings & Investments (NS & I) have announced that the interest rate of their Premium Bonds prize fund will be reduced to 4% down from 4.15% from the January 2025 draw onwards. The odds of winning remain the same, at 22,000 to 1.<\/p>\n

How Premium Bonds Work<\/h2>\n

NS & I is a state-owned UK savings bank. NS&I is the only place in which you can get these Premium Bonds. By putting money in these Premium Bonds, you have a chance to win cash prices.<\/p>\n

Each Bond costs \u00a31 and you can hold between \u00a325 and \u00a350,000 worth of bonds. For every bond that you hold you will be entered into a monthly prize draw, and a random number generator will then decide which bond holders win the draw each month. These winnings are free of tax and range from \u00a325 to \u00a31 million.<\/p>\n

Premium Bonds don\u2019t earn interest. The interest that you would normally earn on your savings is instead used to fund the monthly prize draw.<\/p>\n

What the Changes Mean<\/h2>\n

\u00a0The change to the prize fund rate means less money will be going into that pot which is then distributed out as prizes to Premium Bond winners. From January, for every \u00a3100 that is invested in Premium Bonds, \u00a34 will be paid out every year in prizes (compared to \u00a34.15 for every \u00a3100 before).<\/p>\n

Likelihood of Winning<\/h2>\n

Many people never win a prize with their Premium Bonds, or win a smaller-value prize if they do. Therefore, unless you manage to win one of the bigger prizes offered, your money will most likely fail to keep pace with inflation.<\/p>\n

Commenting on this<\/a>, Laura Suter, director of personal finance at AJ Bell, stated:<\/p>\n

\n

\u201cSavers with money in Premium Bonds should really think about whether the account is right for them. Considering many Premium Bond holders will never will a prize and the average expected return is lower than the top easy-access account, savers could well be better off with a guaranteed return elsewhere.<\/em><\/strong><\/p>\n

A previous Freedom of Information request obtained by AJ Bell reveals that two-thirds of Premium Bond holders, equivalent to just under 14.4 million people, have never won a prize. The average holding for the 5.3 million Premium Bond holders who won a prize between June 2023 and May 2024 sat at \u00a323,047, with 80% of those who won winning more than once during that period. Over the 12 months to May 2024 the average holding of someone not winning was \u00a3175, showing that those with very small balances are unlikely to win.\u201d<\/em><\/strong><\/p>\n<\/blockquote>\n

As pointed out by Suter, those with higher balances in Premium Bonds are more likely to win, as they will have more entries in the prize draw. For example, someone with the minimum balance of \u00a325 would only have 25 entries, compared to someone with the maximum balance of \u00a350,000, who would have 50,000 entries.<\/p>\n

Overall, Premium Bonds may be your cup of tea, or you might prefer coffee! You may decide Premium Bonds are right for you if you want that chance to win tax-free cash prizes each month. However, if you prefer the thought of guaranteed returns on your savings, there may be more suitable options available.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

National Savings & Investments (NS & I) have announced that the interest rate of their Premium Bonds prize fund will be reduced to 4% down from 4.15% from the January 2025 draw onwards. The odds of winning remain the same, at 22,000 to 1. How Premium Bonds Work NS & I is a state-owned UK […]<\/p>\n","protected":false},"author":7,"featured_media":1657,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"spay_email":"","footnotes":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false},"categories":[1],"tags":[1358,1425,254,175,176,44,45,1423,1426,1424,1422,243,76,1201],"yoast_head":"\nPremium Bonds Prize-Fund Rate Cut to 4% - Red Star Wealth<\/title>\n<meta name=\"description\" content=\"NS & I are cutting the interest rate of their Premium Bonds prize fund to 4% from the January 2025 draw onwards\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.redstarwealth.co.uk\/blog\/premium-bonds-prize-fund-rate-cut-to-4\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Premium Bonds Prize-Fund Rate Cut to 4% - 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