SOME of the top Premium Bond prizes will be cut from August meaning less people will win big.
NS&I is slashing the prize fund rate later this summer, from 3.8% to 3.6%.
The prize fund rate for Premium Bonds is being slashed[/caption]
The odds of winning will remain the same, at 22,000 to one.
However, the changes mean there will be an estimated 75 prizes of £100,000 in August, down from 79 currently.
The estimated number of £50,000 prizes will reduce to 151 in August, from 159 this month.
Meanwhile the estimated number of £25,000 prizes will fall to 302 in August, from 317 in June.
There will be an estimated 754 prizes at £10,000 in August, down from 792 in June.
The estimated number of £1million prizes will remain the same, at two.
Meanwhile, the number of £25 prizes is set to increase in August, with an estimated 2,569,568 available, up from 2,197,831 currently.
NS&I, which is backed by the Treasury, has a duty to balance the interests of savers, taxpayers, and the broader financial services sector.
Andrew Westhead, NS&I retail director, said the adjustment to the prize fund rate “reflects the changing landscape for savings”.
He added: “The August draw is expected to deliver more than 6million tax-free prizes worth over £396million.”
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The writing has been on the wall for Premium Bond prizes ever since the Bank of England cut interest rates in May.
“The most competitive easy access savings rates have held up impressively, but the market has been inching gradually south.”
She added: “The question for many savers is whether this will be the last time the rate falls.”
“At a time when the Bank of England is expected to make two more rate cuts before the end of the year, there’s a decent chance that savings rates will continue to gradually edge lower.”
Laura Suter, director of personal finance at AJ Bell, said: “The top easy access account on the market pays 5% interest.”
She added: “Savers with money in Premium Bonds should really think about whether the account is right for them.
“Considering many Premium Bond holders will never win 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.”
It comes after a Freedom of Information (FOI) response recently received by AJ Bell found that nearly two-thirds of Premium Bond holders, equivalent to just under 14.4million people, have never won a prize.
Laura added: “There are a few groups where Premium Bonds are a very attractive option, but for most the safety of a regular interest rate will be better, and savers may want to shop around for the best rates on offer.”
What are Premium Bonds?
Premium Bonds are a type of savings account that doesn’t offer interest payments like conventional accounts.
Instead, you’re given the chance to win a prize worth up to a whopping £1million every month.
Premium Bonds can be bought from the government-backed National Savings and Investments (NS&I) which also offers a variety of other savings products too.
Because Premium Bonds are government-backed, your money is safe and there’s no risk of losing your cash.
You can put money in and take it out whenever you want but need to put in a minimum of £25 to get started and you can invest up to £50,000.
Each £1 you put in Premium Bonds is an entry into the monthly prize draw.
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