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NS&I to increase Premium Bonds prize fund

The UK Premium Bonds prize fund rate will rise from 1 per cent to 1.4 per cent from next month’s draw, the government-backed National Savings & Investments said.

The odds of each £1 Premium Bond number winning a prize will improve from one in 34,500 to one in 24,500, with an estimated additional 1.4mn prizes paid out in the June draw.

NS&I had reacted to rising interest rates on savings accounts, said Laura Suter, head of personal finance at investment platform AJ Bell. “However, before savers get too excited, the chance of winning the big £1mn prize hasn’t got any better, as there are still only two of those available to win each month. But the likelihood of netting a prize worth £100,000 and below has slightly improved.

“Savers can still get a higher rate on easy-access savings, with a current top rate of 1.5 per cent, which is guaranteed — unlike Premium Bond winnings,” she added.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, a savings and investment platform, said the increase was welcome news for the 21mn Premium Bond holders. “A competitive prize rate is the least they deserve,” she said.

“Despite falling well behind competitive savings accounts, the Bonds were still attracting plenty of cash at the lower rate. Between the April and May draw, the number of bonds rose by over 655mn.”

The announcement from NS&I comes days before the 65th anniversary of the introduction of Premium Bonds. At the launch in 1957 the top prize was £1,000.

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