NS&I to increase the Premium Bond prize rate to 3% – here's all you need to know

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NS&I will increase its Premium Bond prize-fund rate to 3% from 2.2% for its January 2023 draw and beyond, with an extra £80 million in higher-value prizes up for grabs. The odds of winning will remain the same at 24,000-to-one, but there will more than three times as many prizes between £5,000 and £100,000 available.

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NS&I to increase the Premium Bond prize rate to 3% – here's all you need to know

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  • southone
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    From
    Paul Lewis

    NS&I raises savings rates and premium bond prize fund now 3% and many more bigger prizes - therfore fewer £25 prizes. More later but with £50,000 bonds you can expect £1200 a year ie 2.4% tax free. Direct Saver and Income bonds rise from 1.8% to 2.3%


  • Albermarle
    Albermarle Posts: 22,577 Forumite
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    southone said:
    From
    Paul Lewis

    NS&I raises savings rates and premium bond prize fund now 3% and many more bigger prizes - therfore fewer £25 prizes. More later but with £50,000 bonds you can expect £1200 a year ie 2.4% tax free. Direct Saver and Income bonds rise from 1.8% to 2.3%


    Good news but not sure about where the 2.4% figure comes from ?

    Maybe it is because there are fewer £25 prizes ( which constitute the vast majority of the prizes)

    So maybe what he means is that with £50K in bonds you are pretty much guaranteed a minimum of 2.4%, then plus an increased  chance of winning a bigger prize, compared to now ?
  • Albermarle
    Albermarle Posts: 22,577 Forumite
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    eskbanker said:
    southone said:
    From
    Paul Lewis

    NS&I raises savings rates and premium bond prize fund now 3% and many more bigger prizes - therfore fewer £25 prizes. More later but with £50,000 bonds you can expect £1200 a year ie 2.4% tax free. Direct Saver and Income bonds rise from 1.8% to 2.3%


    Good news but not sure about where the 2.4% figure comes from ?

    Maybe it is because there are fewer £25 prizes ( which constitute the vast majority of the prizes)

    So maybe what he means is that with £50K in bonds you are pretty much guaranteed a minimum of 2.4%, then plus an increased  chance of winning a bigger prize, compared to now ?
    They've changed the breakdown to pay more larger prizes, so instead of splitting high/medium/low value prizes as 5/5/90% (by value) it'll be 10/10/80%, thereby taking the likely outcome to about 80% of the headline rate instead of 90% as it has been up to now.

    It's not quite as simple as that, in that the number of low value prizes moves from 99.63% of the prizes to 99%, or to put a more positive spin on it, the chances of winning a medium/high one (if winning a prize at all) improve from 0.37% of prizes to 1%!
    Yes we used to say in posts that when the rate was 1.4% , it was effectively 1.25% with a very small chance of winning a big(ish) price, and an infinitesimal chance of winning a Million.
    So now when the rate is 3%, it is effectively 2.4% for the majority, but with a little bit better chance than before of getting a larger prize, although the chance of winning a Million remains very very remote.
  • southone
    southone Posts: 168 Forumite
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    I would be happy with 100K B)
  • pecunianonolet
    pecunianonolet Posts: 1,252 Forumite
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    edited 13 December 2022 at 4:57PM
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    Is there a good source to read about what premium bonds are and their advantages vs. disadvantages and what group of people are attracted by them and why? Been on their website but not much wiser as to me it seems not much different to gambling with the key point of being able to only win, if you actually win. 

    As far as my understanding goes you put money in a pot, there is a likelihood you may win money and what you win is tax free. There are no limits on how much you can put in and 100% of what you put in is guaranteed.
  • eskbanker
    eskbanker Posts: 31,561 Forumite
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    Is there a good source to read about what premium bonds are and their advantages vs. disadvantages and what group of people are attracted by them and why?
    https://www.moneysavingexpert.com/savings/premium-bonds/ is a reasonable place to start, although not without its flaws....

    Been on their website but not much wiser as to me it seems not much different to gambling with the key point of being able to only win, if you actually win.
    The key difference from gambling is that with premium bonds you get your stake back.

    There are no limits on how much you can put in
    The limit is £50K.
  • Oasis1
    Oasis1 Posts: 717 Forumite
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    Will MSE be updating their PB calculator?
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