NS&I cutting big money prizes in Premium Bonds draws

NS&I, who run the Premium Bonds draws each month, announced last year there would be an increase in the number of 'big money' prizes up for grabs starting from the September 2023 draw. 

There was an increase of more than 260,000 prizes in September including the number of £100,000 and £50,000 rewards up for grabs.

Last year NS&I revealed the number of 'big money' prizes in Premium Bond draws would increase. (Image: PA)

Number of 'big money' prizes to be cut from Premium Bond draws

But now it has been revealed the number of 'big money' prizes available to win in Premium Bonds draws is set to be cut from March 2024.

Savings giant NS&I said the prize fund rate will be reduced, from 4.65% to 4.40% from the March draw.

The odds of any £1 Premium Bond number winning a prize will remain the same, at 21,000 to one.

The changes to the 'big money' prizes

The changes to the 'big money' prizes in Premium Bonds draws will include:

• £100,000 - 85 prizes available from March, down from 91 in January
• £50,000 - 170 down from 182
• £25,000 - 339 down from 365

The number of £1 million prizes will remain the same, at two.

Despite these cuts there will be an increase in £25 prizes available - with 1,425,338 up from grabs from March up from 1,037,784 in January.

See how these new changes will impact the 'big money' prizes in upcoming Premium Bond draws. (Image: PA)

NS&I reveals reason for reduction in 'big money' Premium Bonds prizes

NS&I is backed by the Treasury and it is set targets for the net amounts of financing it should raise. It has a duty to balance the interests of savers, taxpayers and the wider financial services sector.

Figures released by NS&I last year showed it delivered £7.7 billion of net financing in the second quarter of 2023/24, taking its half-year total to £9.8 billion.

Its net financing target for 2023/24, set at the Spring Budget 2023, is £7.5 billion, with room for manoeuvre of plus or minus £3 billion.

NS&I retail director Andrew Westhead said: “These changes reflect our requirement to strike a balance between the interests of our savers, taxpayers and the stability of the broader financial services sector.

“In a dynamic savings market, it’s important that our rates are set at an appropriate position against those of our competitors as we work towards meeting our annual net financing target.

“After these changes, the Premium Bonds draw in March is expected to pay out over 5.7 million tax-free prizes totalling more than £444 million to savers across the UK.”

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Change to Premium Bonds prizes sign "rates bonanza" is coming to an end

A finance expert described the cut in 'big money' prizes from Premium Bonds draws as “the biggest sign yet” that a rates bonanza enjoyed by savers in recent months is coming to an end.

Savings rates have been raised generally amid increases in the Bank of England base rate, but bank rate rises have been put on pause amid signs that inflation is easing.

There are also expectations that the base rate will be cut at some point.

Director of personal finance at AJ Bell, Laura Suter, said: “This is the biggest sign yet that the rates bonanza enjoyed by savers is coming to an end.

“This rate cut marks the end of 18 months of Premium Bond prize fund increases from NS&I.

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"The Government-backed provider has been increasing the prize fund on Premium Bonds consistently since 2022 as base rate rose and the saving war heated up.

"But that has reached its peak: the Premium Bond expected prize fund is dropping to 4.4% from March, from the current 4.65%.”

Ms Suter added: “This is another signal for savers to shop around and nab the best rates before they fall further.”