Martin Lewis’ MoneySavingExpert.com team has discussed whether Premium Bonds are still a worthwhile investment following NS&I’s announcement of a reduction in its prize fund rate. Premium Bonds function as a savings product where instead of receiving a fixed interest rate, individuals are entered into a monthly prize draw. The prizes range from £25 to £1 million, with the chances of winning varying between smaller and larger amounts. NS&I recently confirmed a decrease in the Premium Bonds prize fund rate from 3.6% to 3.3% starting from the April 2026 draw.
The prize fund rate acts as a form of interest rate for Premium Bonds, with the odds of winning a prize per bond declining from 1 in 22,000 to 1 in 23,000. MoneySavingExpert.com highlighted that the latest rate cut makes it easier to find better returns elsewhere compared to Premium Bonds. They explained that even with the maximum investment of £50,000, most individuals with average luck are unlikely to achieve returns of 3.6% or 3.3%.
MoneySavingExpert.com emphasized that accounts offering interest payments are now more likely to outperform Premium Bonds for the majority of savers. They pointed out that savings interest provides a guaranteed return, offering more certainty compared to the unpredictability of Premium Bonds where many may not win anything. MoneySavingExpert.com suggested that individuals are expected to receive less than the prize fund rate and have minimal chances of winning the top £1 million prize.
In conclusion, MoneySavingExpert.com stated that while Premium Bonds may not provide the best returns for most savers, it could still be a viable option for those who understand and accept the associated risks.