NS&I to increase the Premium Bond prize rate to 3% – here's all you need to know 13 December 2022 at 4:54PM in Savings & investments 52 replies 7.8K views

RedImp_2

Do they have some kind of algorithm to decide how they distribute prizes? Must admit find it odd to reduce the number of £25 prizes, could at least have kept it similar whilst increasing higher prizes.  Tend to think if people keep winning then more likely to keep investing 

kinger101

Black_Cat2 said:

Typical.. just pulled my money out due to crap returns lol.  This black cat has poor luck! 😹

Me too, but I'm waiting to see what savings rates look like after tomorrow before making a decision.  

ranciduk

mebu60 said:

ranciduk said:

The last time they raised the rate I was worried as they had greatly reduced the £25 prizes - the only prize I have ever won

and I’ve won nothing since 

 Now they are reducing the £25 prizes AGAIN

forget that - I’m out

Not sure that they are reducing the number of £25s and there is more likelihood of winning a prize >£25. 

You don't say the size of your holding. At the new 3% headline you'll need c£1000 to average a win of 1 x £25 a year. You'd need more previously at 2.2% headline and that was only recently increased in October from 1.4% which would require a holding of c£2000 to average 1 x £25 per annum.

£25k

won £200 this year

nothing at all since the previous rise

After today’s latest rise;


“.... though this is mostly offset by the number of £25 prizes falling by around 900,000.”

jak22

Even after the last change more £50 and £100s did start to appear - now there'll be nearly as many £50/100 as £25 prizes - maybe there's a cost saving in a single £100 transfer than 4 £25 for so many every month

masonic

Audaxer said:

Albermarle said:

eskbanker said:

Albermarle 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.

Is 2.4% only likely if you have the full £50k in PBs?

As a rough rule of thumb, median returns tend to drop off more sharply as holding size is reduced below the odds of winning the lowest denomination prize (formerly 24,000 to 1 ~ £24k holding), as you won't have enough entries in each draw to secure an average outcome. You may need even more now given the redistribution between other lower value prizes.

MX5huggy

jak22 said:

Even after the last change more £50 and £100s did start to appear - now there'll be nearly as many £50/100 as £25 prizes - maybe there's a cost saving in a single £100 transfer than 4 £25 for so many every month

Historically the smallest prize was £50 as interest rates rise I can see them doing away with the £25 prize again. More “luck” will be required to hit average returns. https://amp.theguardian.com/money/2006/nov/01/bonds.saving

hoc

There will be even fewer £25 prizes now after they had already reduced a few months ago. It's becoming more and more a "lottery" and less a "guarantee" for most.

eskbanker

hoc said:

There will be even fewer £25 prizes now after they had already reduced a few months ago. It's becoming more and more a "lottery" and less a "guarantee" for most.

???

Total number of prizes remains the same (relative to bonds in circulation) in order to continue the unchanged 24,000 to 1 odds, but their average value increases significantly - in what way is that a negative change?

Swipe

My luck on my max holding got worse since the last update. I hope it doesn't get even worse after this one too

Swipe

The increase of their Direct Saver to 2.3% is a welcome surprise