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Boost for savers as Premium Bond prize rate hits 14-year high

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Prize pot: National Savings & Investments hiked its prize fund from 1.4% to 2.2 % – meaning tens of millions more are up for grabs

Savers stand a greater likelihood of winning a Premium Bond prize after National Savings & Investments raised its rates to a 14-year high.

The Treasury-backed bank yesterday hiked its prize fund from 1.4 per cent to 2.2 per cent — meaning tens of millions more are up for grabs. It’s the newest provider to hitch the fight for households’ money after rates of interest began edging up in December.

Some 22.4 million savers hold £119.5 billion in Britain’s favourite savings product. NS&I expects to pay out £218 million next month, an additional £79 million on the £139 million total it paid in September. The variety of prizes paid will rise by 98,000 to 4,960,308.

The quantity of £50 and £100 prizes will increase dramatically to 728,737, up from 38,137 a chunk.

The £500 prize number will rise from 8,337 to 13,092, while there will likely be 4,364 prizes of £1,000, up from 2,779. 

Greater prizes may even nearly double. We are able to expect 357 prizes of £5,000, 178 at £10,000, 72 at £25,000, 35 at £50,000 and 18 at £100,000 next month.

But NS&I has slashed the variety of £25 prices by greater than one million to three.5 million, down from 4.8 million. 

There’s also no change within the jackpot. It stays that two lucky winners will pocket £1 million within the draw every month.

And despite the large increase, the percentages of winning a prize have only improved barely from 24,500 to at least one to 24,000 to at least one.

The changes are as a consequence of come into effect next month, with the outcomes announced on October 4.

It’s the second rise within the Premium Bond fund rate this yr. It rose from its lowest level of 1 per cent to 1.4 per cent in June. 

The fund hit all-time low in 2009, at 1 pc for five months in the course of the financial crisis, but didn’t see this low level again until December 2020. It stayed there for 18 months with odds of winning just 34,000 to at least one.

Because the Bank of England base rate began to rise at the tip of last yr, the prize fund has risen by 1.2 percentage points. Base rate is 2.15 points as much as 2.25 per cent.

Ian Ackerley, chief executive at NS&I says: ‘These changes have helped us be sure that premium bonds are attractive.’

Popular: Some 22.4 million savers hold £119.5bn in Premium Bonds, making them Britain¿s favourite savings product

Popular: Some 22.4 million savers hold £119.5bn in Premium Bonds, making them Britain’s favourite savings product 

But Laura Suter, head of private finance at AJ Bell, cautions: ‘Savers have to be aware that they might win nothing, and so get no return on their money.

‘Most can be higher off in an easy-access account.’

Sarah Coles, personal financial analyst at Hargreaves Lansdown adds: ‘By putting your money into Premium Bonds, you’re giving up any interest you would possibly earn elsewhere. 

With high inflation, you’ll be losing much more of the spending power of your savings by leaving them there.’ NS&I’s Direct Saver, the web and telephone easy-access account pays 1.2 per cent. Similar deals elsewhere are nearer 2 per cent.

Some 340,000 savers have nearly £31 billion on this account making it the second hottest with the Government bank.

However the rate has remained the identical since July 21 although the overall level of rates of interest has risen by 1 percentage point since then.

Income Bonds, popular with pensioners as they pay out income monthly, are also stuck at 1.2 per cent.

Its Direct Isa at 0.9 per cent looks equally poor when the highest quick access Isa rate stands at 1.75 per cent from Gatehouse Bank.

NS&I still pays a miserly 0.01 per cent on its postal-based Investment Account through which savers hold £2.7 billion.

However the 345,000 savers with Index-Linked Savings Certificates fare higher. They earn inflation, currently 9.9 per cent, plus 0.01 per cent. Those with maturing certificates can reinvest with NS&I.

sy.morris@dailymail.co.uk

our greatest money Isa savings tables 

How you can find the most effective savings rates

Savings rates have been within the doldrums for a few years however the situation was hugely exacerbated by the pandemic and the emergency base rate cut to 0.1 per cent.

But there are methods to make sure your money is a minimum of in the most effective of the bunch in any respect times. 

Checking top rates is crucial, but it’s also possible to make life easier overall and manage your savings pots in a single place. 

Over the past few years plenty of savings platforms have launched, offering savers the choice to modify as and when higher deals change into available and manage accounts from different banks and constructing societies.

They each work barely in another way and include their very own exclusives. To examine out what’s on offer have a look yourself:

Platforms featured below are independently chosen by That is Money’s specialist journalists. In the event you open an account using links which have an asterisk, That is Money will earn an affiliate commission. We don’t allow this to affect our editorial independence. 

> Raisin* 

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Or you may view That is Money’s comprehensive best buy savings tables here, independently curated by savings guru Sylvia Morris:

> Compare best savings rates now 

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