Premium Bond holders could be hit with even deeper cuts, as fears grow that NS&I will slash rates yet again—on top of the reduction already set for next month.
NS&I is set to cut its prize fund rate from four per cent to 3.8 per cent in April, but experts warn this may be just the beginning of further reductions.
The state-owned savings giant recorded a substantial net inflow of £5.5billion between October and December 2024.
This significant influx of funds has prompted finance experts to warn that further Premium Bond reductions may be on the cards, with concerns that "this is unlikely to be the last of the cuts to the prize rate".
Sarah Coles, head of personal finance at Hargreaves Lansdown said: "Premium Bond woes may continue even after the NS&I fundraising target increases."
She explained that NS&I's massive third quarter "explains the raft of recent rate cuts".
She added: "We're yet to get the latest of these cuts - the Premium Bond prize cut set for April - when it falls from four per cent to 3.8 per cent. The question for many savers is whether this will be the last."
Premium Bonds holders can check to see if they have won a prize via the Premium Bonds prize checker app NSIThe Treasury-backed provider nearly reached its annual target with three months of the financial year still remaining. NS&I has a net financing target of £9billion for the current financial year, with a margin of plus or minus £4billion.
Net financing tracks inflows and outflows, balancing saver benefits with taxpayer value and market stability.
The total it has raised across the first three quarters of this year stands at £8.9billion, meaning it has almost entirely met its target with three months still to go.
Wednesday's spring statement confirmed that NS&I is now expected to raise a total of £10.5billion in 2024/25, which remains within its target range.
NS&I; is reducing the Premium Bonds prize fund rate in April 2025NS&I; | GETTYThe spring statement also confirmed that NS&I will have a 2025/26 net financing target of £12billion, with a margin of plus or minus £4billion. While the fundraising target will rise to £12billion, savings rates are expected to fall across the market.
Coles said: "The rush into NS&I in the third quarter shows how much pent-up demand there is. Sadly for bond holders, it means this is unlikely to be the last of the cuts to the prize rate."
This target continues to exclude proceeds from Green Savings Bonds, which sit outside net financing. NS&I's overall net financing performance for 2024/25 will be announced as part of its annual results later in 2025.
The odds of winning a prize from the April 2025 draw will remain at 22,000 to 1. There is expected to be over £411million in the prize fund with over 5.9 million prizes available.
These will range from two £1million prizes to over 2.1 million £25 prizes.
NS&I has already responded to recent Bank of England base rate reductions with a series of interest rate cuts to its variable and fixed-term products.
A spokesman from NS&I said: "NS&I reviews the interest rates on all of its products regularly and makes changes when they are appropriate, to ensure that it balances the interests of savers, taxpayers and the broader financial services sector."
Savers can win £1m with Premium Bonds
GETTYAs wages rise ahead of inflation, more people are finding money to put away for the future.
The Hargreaves Lansdown Savings & Resilience Barometer shows that on average people are saving 5.5 per cent of income. This represents a significant amount of cash looking for a home in the current market.
Coles warned that NS&I needs to be careful that Premium Bonds don't fall behind the rest of the market in what she described as "the slow march towards lower rates".
