Premium Bond boost for more than 22 million holders after NS&I update

More than 22 million Premium Bond holders will will get a boost from July’s draw.

National Savings & Investments has confirmed that the Premium Bonds prize fund rate will increase to 3.80%. The prize fund rate is the nearest thing to an interest rate on a savings account and cut from 3.6% to 3.3% in last month’s draw.

At the same time, the odds of winnings a prize on the Premium Bonds will go back from 23,000 to one to 22,000 to one.

NS&I says, compared to this month’s draw, it is estimated that there will be 322,000 additional prizes in the July draw, with the prize pot increasing by more than £60million. There are expected to be 12 additional £100,000 prizes, 24 more £50,000 prizes and an extra 49 £25,000 prizes.

Lower down the tier, there are expected to be 2.8 million £25 prizes - half a million more than in this month's draw - with the estimated number of £50 and £100 prizes rising by around 200,000 to more than 1.9million.

The state-backed bank also reveald that, from today, it is increasing the interest rate on a number of savings products, with its Direct Saver rising from 3.05% to 3.45%, its Income Bonds now 3.40% from 3.01%, its Direct ISA now 3.80%, and its Junior ISA now 3.70%.

Andrew Westhead, NS&I retail director, said: “We regularly review our products to ensure they reflect current market conditions, and we’re pleased to be able to improve rates across five variable savings accounts today. This reflects changes in the wider savings market and helps ensure we meet our net financing target.

“Premium Bonds offer the monthly excitement of tax-free prizes with 100% security backed by HM Treasury, and the flexibility to withdraw at any time. So, I’m pleased that from July we can improve both the prize fund rate and the odds meaning even more chances to win for our 22 million Premium Bonds holders.”

While the lure of winning a prize is often the reason people hold Premium Bonds, the prize fund rate - which isn't guaranteed - is less than you'd get in a best buy savings products.

Industry experts Moneyfacts says the average one-year fixed savings rate, for example, is 4.16%.