NS&I to increase the Premium Bond prize rate AGAIN to 3.3% – here's all you need to know

MSE_Chris_O

NS&I will increase its Premium Bond prize-fund rate to 3.3% from 3.15% for its March 2023 draw and beyond, with an extra £15 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 prizes between £50 and £100,000 available.

Read the full story here:

NS&I to increase the Premium Bond prize rate AGAIN to 3.3% – here's all you need to know

If you haven’t already, join the forum to reply.

webwiz

I think that the best way to think of PBs is that if you have a large holding you are buying two different parts. One part, 20p of each bond,is a lottery ticket which might win you up to a million, but probably won't. The other part, 80p of each bond will on average get a return of 3.3% from prizes of £100 and below. So if you don't win a big prize your return will average 2.64% on the full cost of the bond. As it's tax free this is quite competitive for those who have maxed out their personal savings allowance especially if they are higher rate payers. If you only have a small holding you should regard the bonds as buying raffle tickets with the potential interest foregone

chucknorris

webwiz said:

I think that the best way to think of PBs is that if you have a large holding you are buying two different parts. One part, 20p of each bond,is a lottery ticket which might win you up to a million, but probably won't. The other part, 80p of each bond will on average get a return of 3.3% from prizes of £100 and below. So if you don't win a big prize your return will average 2.64% on the full cost of the bond. As it's tax free this is quite competitive for those who have maxed out their personal savings allowance especially if they are higher rate payers. If you only have a small holding you should regard the bonds as buying raffle tickets with the potential interest foregone

That is a good way of looking at it, and it is certainly the way that I look at it, being a high rate tax payer it is a competitive return, and I am also on the fringe of the 60% tax band, so potentially an even better return in the future.

sgog

webwiz said:

I think that the best way to think of PBs is that if you have a large holding you are buying two different parts. One part, 20p of each bond,is a lottery ticket which might win you up to a million, but probably won't. The other part, 80p of each bond will on average get a return of 3.3% from prizes of £100 and below. So if you don't win a big prize your return will average 2.64% on the full cost of the bond. As it's tax free this is quite competitive for those who have maxed out their personal savings allowance especially if they are higher rate payers. If you only have a small holding you should regard the bonds as buying raffle tickets with the potential interest foregone

Isn't it sad that the government is sponsoring a lottery without offering an equivalent luck-free tax-free alternative  ? 
I mean, it costs the taxpayer 3.3%, and most people earn 2.64% to subsidize this crazy lottery.

EthicsGradient

English government lotteries to raise finance are as old as the Bank of England - 1694:
https://en.wikipedia.org/wiki/Bank_of_England
https://en.wikipedia.org/wiki/Million_Lottery

sgog

EthicsGradient said:

English government lotteries to raise finance are as old as the Bank of England - 1694:
https://en.wikipedia.org/wiki/Bank_of_England
https://en.wikipedia.org/wiki/Million_Lottery

"Tradition is a guide and not a jailer."

W. Somerset Maugham

Albermarle

sgog said:

webwiz said:

I think that the best way to think of PBs is that if you have a large holding you are buying two different parts. One part, 20p of each bond,is a lottery ticket which might win you up to a million, but probably won't. The other part, 80p of each bond will on average get a return of 3.3% from prizes of £100 and below. So if you don't win a big prize your return will average 2.64% on the full cost of the bond. As it's tax free this is quite competitive for those who have maxed out their personal savings allowance especially if they are higher rate payers. If you only have a small holding you should regard the bonds as buying raffle tickets with the potential interest foregone

Isn't it sad that the government is sponsoring a lottery without offering an equivalent luck-free tax-free alternative  ? 
I mean, it costs the taxpayer 3.3%, and most people earn 2.64% to subsidize this crazy lottery.

The bit you are missing is that many people actually like PB's as it is a bit of fun for them, waiting to see what prizes they have won. Many will probably keener to save more in PB's than in a  normal savings account.
It is not rationally logical, but human beings are a mixture of rationale and emotion.
Getting rid of PB' s would be unpopular.

Stargunner

Albermarle said:

sgog said:

webwiz said:

I think that the best way to think of PBs is that if you have a large holding you are buying two different parts. One part, 20p of each bond,is a lottery ticket which might win you up to a million, but probably won't. The other part, 80p of each bond will on average get a return of 3.3% from prizes of £100 and below. So if you don't win a big prize your return will average 2.64% on the full cost of the bond. As it's tax free this is quite competitive for those who have maxed out their personal savings allowance especially if they are higher rate payers. If you only have a small holding you should regard the bonds as buying raffle tickets with the potential interest foregone

Isn't it sad that the government is sponsoring a lottery without offering an equivalent luck-free tax-free alternative  ? 
I mean, it costs the taxpayer 3.3%, and most people earn 2.64% to subsidize this crazy lottery.

The bit you are missing is that many people actually like PB's as it is a bit of fun for them, waiting to see what prizes they have won. Many will probably keener to save more in PB's than in a  normal savings account.
It is not rationally logical, but human beings are a mixture of rationale and emotion.
Getting rid of PB' s would be unpopular.

I totally agree. The wife and I enjoy checking the app every month and seeing which one of us has done best that month. Unfortunately she seems to have the most luck 😂. Even if you don’t win anything in a month, unlike the lottery, you have not lost the cost of your tickets.

sgog

Albermarle said:

sgog said:

webwiz said:

I think that the best way to think of PBs is that if you have a large holding you are buying two different parts. One part, 20p of each bond,is a lottery ticket which might win you up to a million, but probably won't. The other part, 80p of each bond will on average get a return of 3.3% from prizes of £100 and below. So if you don't win a big prize your return will average 2.64% on the full cost of the bond. As it's tax free this is quite competitive for those who have maxed out their personal savings allowance especially if they are higher rate payers. If you only have a small holding you should regard the bonds as buying raffle tickets with the potential interest foregone

Isn't it sad that the government is sponsoring a lottery without offering an equivalent luck-free tax-free alternative  ? 
I mean, it costs the taxpayer 3.3%, and most people earn 2.64% to subsidize this crazy lottery.

The bit you are missing is that many people actually like PB's as it is a bit of fun for them, waiting to see what prizes they have won. Many will probably keener to save more in PB's than in a  normal savings account.
It is not rationally logical, but human beings are a mixture of rationale and emotion.
Getting rid of PB' s would be unpopular.

I am not "against" having PB in their current form, as much as I'd like to see an equivalent luck-free tax-free similar yield bond.
In some sense, the government is telling us: if you want to exceed your savings allowance without taxation, you must participate in our lottery.

Stargunner

sgog said:

Albermarle said:

sgog said:

webwiz said:

I think that the best way to think of PBs is that if you have a large holding you are buying two different parts. One part, 20p of each bond,is a lottery ticket which might win you up to a million, but probably won't. The other part, 80p of each bond will on average get a return of 3.3% from prizes of £100 and below. So if you don't win a big prize your return will average 2.64% on the full cost of the bond. As it's tax free this is quite competitive for those who have maxed out their personal savings allowance especially if they are higher rate payers. If you only have a small holding you should regard the bonds as buying raffle tickets with the potential interest foregone

Isn't it sad that the government is sponsoring a lottery without offering an equivalent luck-free tax-free alternative  ? 
I mean, it costs the taxpayer 3.3%, and most people earn 2.64% to subsidize this crazy lottery.

The bit you are missing is that many people actually like PB's as it is a bit of fun for them, waiting to see what prizes they have won. Many will probably keener to save more in PB's than in a  normal savings account.
It is not rationally logical, but human beings are a mixture of rationale and emotion.
Getting rid of PB' s would be unpopular.

I am not "against" having PB in their current form, as much as I'd like to see an equivalent luck-free tax-free similar yield bond.
In some sense, the government is telling us: if you want to exceed your savings allowance without taxation, you must participate in our lottery.

You can use ISA’s to protect your savings from tax