Savers have been dealt a welcome boost today after National Savings & Investments (NS&I) announced a raft of rate hikes, including another increase to the Premium Bond prize rate.
Starting from the next draw on 1 March 2023, the Premium Bond rate will rise from 3.15% to 3.3%, meaning savers will be in line to win more high-value prizes.
For example, the total number of £100,000 prizes will tick up from 59 to 62 and £50,000 prizes will rise from 117 to 123 (see table below for full list of changes).
There will still only be two £1 million jackpots, however.
Remarkably, it means the Premium Bond prize rate will have been hiked five times in the space of 10 months: in May 2022, it stood at just 1%.
While Premium Bond holders will have to wait until March to benefit from the latest change, savers who hold funds in Income Bonds and Direct Saver accounts will see their rates rise with immediate effect - from 2.6% to 2.85%.
While these increases need to be seen in the context of inflation standing at a whopping 10.5%, it's nonetheless a welcome change that could benefit many thousands of savers.
Breakdown of Premium Bond prizes
|
Prize value Feb 2023 |
Prize value Feb 2023 |
Prize value Mar 2023 |
Prize value Mar 2023 |
|
£1,000,000 |
2 |
£1,000,000 |
2 |
|
£100,000 |
59 |
£100,000 |
62 |
|
£50,000 |
117 |
£50,000 |
123 |
|
£25,000 |
236 |
£25,000 |
248 |
|
£10,000 |
590 |
£10,000 |
620 |
|
£5,000 |
1,177 |
£5,000 |
1,236 |
|
£1,000 |
12,573 |
£1,000 |
13,173 |
|
£500 |
37,719 |
£500 |
39,519 |
|
£100 |
1,280,509 |
£100 |
1,400,876 |
|
£50 |
1,280,509 |
£50 |
1,400,876 |
|
£25 |
2,376,161 |
£25 |
2,132,917 |
|
Total £314,347,875 |
Total 4,989,652 |
Total £329,316,825 |
Total 4,989,652 |
How competitive is the new Premium Bond rate?
NS&I chief executive, Ian Ackerley, said the February rate hike to 3.3% shows the state-backed bank is "committed to ensuring our products remain attractive and our customers can continue to save with confidence".
So how attractive are the bonds in comparison to other 'traditional' savings accounts?
Obviously, most savings accounts don't work like Premium Bonds as they pay a set rate to all savers rather than handing out prizes.
Perhaps the best comparison is easy access savings accounts, which allow you to deposit and withdraw money in a broadly similar fashion.
The best such account currently on the market is from Paragon Bank and offers a 3.1% rate, putting Premium Bonds comfortably ahead.
Throw in the fact that all NS&I accounts also come with the added security of Government-backing and it's clear that the bonds are the best access savings deal in town at the minute.
Expect to see even more savings flowing into the bonds as a result of the latest change (although you should think carefully before joining the rush).
This article contains affiliate links, which means we might receive a small commission if you take out any of the products mentioned. However, this hasn't affected our editorial judgement and won't affect the rate you are offered.