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NS&I cuts premium bond prize rate – is it time to move your money elsewhere?
The total value of prizes will drop by nearly £19m from April
National Savings and Investments (NS&I) is cutting the prize fund rate on premium bonds from April’s draw, reducing the total amount it pays out in prizes.
The rate, which reflects the average annual payout, will drop from 4% to 3.8%, shrinking the overall prize fund by just under £19m.
This is the second cut this year and follows the Bank of England’s latest base rate decision.
Here, Which? breaks down what this means for premium bond holders, how the odds of winning will be affected, and other rate changes NS&I is making across its savings products.
What's happening to the prize fund rate?
The 4.65% prize fund rate in September 2023's draw now feels like a distant memory. Since then, NS&I has cut the rate four times, dropping to 4.4% in March last year, 4.15% in December 2024, 4% in January 2025, and now falling again to 3.8% from April.
The lower rate means the total prize fund will shrink from around £430m to £411m.
However, the total number of prizes will increase, rising from 5.86m to 5.9m, thanks to a boost in £25 payouts.
The table below shows how the number of prizes will change from April:
| Value of prize | Number of prizes in February 2025 draw | Number of prizes in April 2025 draw | Change in number of prizes |
|---|---|---|---|
| £1m | 2 | 2 | 0 |
| £100,000 | 82 | 78 | -4 |
| £50,000 | 164 | 157 | -7 |
| £25,000 | 328 | 313 | -15 |
| £10,000 | 820 | 781 | -39 |
| £5,000 | 1,641 | 1,565 | -76 |
| £1,000 | 17,202 | 16,445 | -757 |
Source: NS&I
What will the odds of winning be?
Despite the rate cut, the odds of winning a prize remain unchanged at 22,000 to 1 for each bond you hold. But while your chances of winning haven’t changed, the prize you’re likely to win has.
There will still be two jackpot winners each month, but the number of high-value prizes, including those worth £100,000, £50,000, £25,000, £10,000 and £5,000, will drop by 141 overall.
The total number of prizes worth between £50 and £1,000 will also shrink by 326,000 , while £25 payouts will increase by 363,000, meaning more winners will walk away with the smallest possible prize.
If you’re thinking of investing now to take advantage of the current prize rate, you’re out of luck. Premium bonds must be held for a full calendar month before entering a draw, meaning any new purchases will be subject to April's rules.
- Find out more: should you get premium bonds?
Why has the prize rate fallen?
NS&I says the latest cut reflects the wider savings market, following the Bank of England’s decision to lower the base rate from 4.75% to 4.5% earlier this month.
As returns on easy-access accounts fall, NS&I said it adjusts its products to ‘reflect current market conditions’.
Andrew Westhead, NS&I retail director, added: 'The changes enable us to continue to balance the interests of savers, taxpayers, and the stability of the broader financial services sector.'
- Find out more: what is National Savings and Investments?
Should you ditch your premium bonds?
With the prize fund rate falling, some savers may be wondering whether to move their money elsewhere.
The main appeal of premium bonds is the chance to win big, but the odds of landing a life-changing prize are slim.
Each £1 bond has a 1 in 22,000 chance of winning any prize, but the likelihood of winning £1m is much lower.
A saver with £100 invested has a 1 in 643 million chance of winning the jackpot, while someone with the maximum £50,000 holding has a much better – but still rather remote – chance of 1 in 1.29 million. It is therefore no surprise that 42% of recent jackpot winners had the maximum amount saved.
Although premium bond prizes are tax-free and your money is 100% backed by the Treasury, those looking for guaranteed returns may find better value in top easy-access savings accounts, which currently pay up to 4.75%.
- Find out more: best savings accounts and bonds
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What else is NS&I changing?
Alongside cutting the premium bonds prize fund rate, NS&I is making other changes to its savings products.
From 5 March 2025, the rate on its Direct Saver account will fall from 3.5% to 3.3% AER, while Income Bonds will drop from 3.49% to 3.3% AER.
These accounts weren’t market-leading before the cut, and savers may find better returns elsewhere.
Meanwhile, NS&I has increased the rate on its Direct Isa from 3% to 3.5% AER. The rise comes as Isa providers compete for custom in the run-up to the new tax year.
While the top easy-access Isas pay nearly 5%, many savers may still choose NS&I for its government backing.
Laura Suter, director of personal finance at AJ Bell, says: ‘Many savers will still opt for the account, despite sacrificing interest to do so, because of the safety and brand recognition of NS&I.
'Someone with £15,000 saved in their Isa will be sacrificing £230 interest a year by choosing NS&I’s Isa over the market-leading easy-access rate.’
- Find out more: best cash Isa rates 2025
This article has been updated since it was first published to reflect corrected figures in the table of prizes in April.
