NS&I to increase premium bonds prize fund rate from 1.00% to 1.40%

S_uk

NS&I increases Premium Bond prize fund rate from 1.00% to 1.40%, from June prize draw. The odds of each £1 bond winning a prize improve from 34,500:1 to 24,500:1 making an additional 1.4m prizes.

Some good news for savers.

Nebulous2

S_uk said:

NS&I increases Premium Bond prize fund rate from 1.00% to 1.40%, from June prize draw. The odds of each £1 bond winning a prize improve from 34,500:1 to 24,500:1 making an additional 1.4m prizes.

Some good news for savers.

That's some good news. They must have been noticing outflows....... 

zxspeccy

Back to its pre-December 2020 level, and a lot more attractive to those who are likely to earn over their PSA, as any winnings are tax-free.

Exodi

Nebulous2 said:

S_uk said:

NS&I increases Premium Bond prize fund rate from 1.00% to 1.40%, from June prize draw. The odds of each £1 bond winning a prize improve from 34,500:1 to 24,500:1 making an additional 1.4m prizes.

Some good news for savers.

That's some good news. They must have been noticing outflows....... 

I expect so. I personally moved all my money out of NS&I a couple of months ago - was no sense in earning 1% (conceptually, though in reality less than this) when you could dump it into the providers payinga a guaranteed 2%.

1.4% is still low, but no longer insultingly low. People put a value on hope. 

MX5huggy

Oh…. Last night I went through this with Mrs MX5 and opened a Chase account but now for a “loss” 0.1% I’ll take the gamble of winning big. 

refluxer

What would that take the realistic return to for someone with a large holding and average luck ? 1.2% ? 1.3% ?

Albermarle

refluxer said:

What would that take the realistic return to for someone with a large holding and average luck ? 1.2% ? 1.3% ?

Yes probably somewhere between those two figures + an infinitesimal chance of winning a Million !

Frequentlyhere

It's good news and might be right for some, but it's worth remembering that if one is using PB's as a proxy long-term savings account then even with this new rate you could be receiving over 50% more expected return by putting your savings in a 6-9 month savings account, and the leading 1 year fixes even more than that...

Again though, horses for courses etc, not saying no-one should use them.

LeafGreen

refluxer said:

What would that take the realistic return to for someone with a large holding and average luck ? 1.2% ? 1.3% ?

The odds of a single bond winning are now 24,500:1.  So if you had £49,000 of bonds you could expect to get 2 prizes per month on average.  The vast majority of these will be £25 each, that works out to 1.22% (with a slight chance of getting a bigger prize)

strawb_shortcake

Hope to see an improvement to my winnings going forward 
Yr 1 £650
Yr 2 £425 
Partial Yr 3 (8 months) £150. 

Had been considering pulling mine out but will see what my luck brings the next few months 

Albermarle

grahamgoo said:

refluxer said:

What would that take the realistic return to for someone with a large holding and average luck ? 1.2% ? 1.3% ?

The odds of a single bond winning are now 24,500:1.  So if you had £49,000 of bonds you could expect to get 2 prizes per month on average.  The vast majority of these will be £25 each, that works out to 1.22% (with a slight chance of getting a bigger prize)

With the £49K , you would hope to pick up the odd £50 or £100 ( instead of £25) maybe once every couple of years, and one £500 every 25 years , so probably slightly more than 1.22% on average. About 1.28% for a long term holder of the full amount and maybe 1.25% for most.
After that I think you just need to be very lucky !