Premium Bonds odds improve to best level in 15 years as NS&I increases interest rates

The odds will also improve from 22,000 to one to 21,000 to one – the best level since April 2008’s prize draw.

NS&I will also increase interest rates for Income Bonds, Direct Saver, Direct ISA, Junior ISA and Investment Account from August 18.

NS&I Chief Executive, Dax Harkins, said: “These upcoming increases show that we’re supporting savers up and down the country.

“Premium Bonds are one of the nation’s favourite savings products, so increasing the prize fund rate to its best level since 1999 and improving the odds means that more people will have the chance to win prizes each month.

“These rate increases will help ensure that our savings products remain attractive to customers, whilst ensuring that we continue to balance the needs of savers, taxpayers and the broader financial services sector.”

NS&I estimates that there will be 5,785,904 prizes up for grabs from September, more than 269,000 more compared to August 2023.

NS&I will increase the interest rate on the Direct Saver from 3.40 per cent to 3.65 per cent, from August 18.

Income Bonds customers will see the rate rise to 3.59 per cent gross/3.65 per cent AER, up from 3.40 per cent/3.45 per cent AER.

The NS&I Direct ISA will rise to three per cent tax-free from 2.40 per cent tax-free.

There’s also good news for younger savers as the Junior ISA rate will increase to four per cent tax-free, from 3.65 per cent tax-free.

LATEST DEVELOPMENTS:

• Lloyds Bank, Halifax and Bank of Scotland increase interest rates on savings accounts
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NS&I will also increase the interest rate that it pays on its Investment Account to one per cent from 0.85 per cent.

The news comes shortly after the Bank of England increased the base rate for the 14th consecutive time.

It now stands at 5.25 per cent - the highest in 15 years.

The 0.25 percentage point increase came in as a relief for borrowers, as some experts had previously predicted a 0.5 percentage point rise.

Myron Jobson, senior personal finance analyst at interactive investor, thought the government-backed savings provider was “attempting to lead by example” by passing on the recent base rate rise to savers.

He added: “This follows the recent launch of a 14-point action plan by the city watchdog to ensure that banks are passing on the best savings rates to their customers.

“The NS&I has notably passed on the 0.25 per cent uptick in the base rate and then some onto three of its variable rate products, in a move that throws down the gauntlet to high street banks.

“It bodes well for savers – but the rates are not market leading, so it still pays to shop around for the best deal.”