MSE News: NS&I to increase Premium Bond prize rate to 4%

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  • auser99
    auser99 Posts: 233 Forumite
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    So NS&I are still paying catch-up... Shawbrook are now paying 4.35% and even the best ISAs are 4.1% (Coventry).

    Does anyone else think they should just add £25 prizes? the £1 million is a nice marketing point, but there is almost no chance of winning it! so just keep a single million prize and vastly increase the £25 prizes, that way there is a much better chance of winning something! (yes, I did get less than £100 this month on the max holding :'( )  which is what we are doing by putting our money in premium bonds.
    Their "easy access" ISA (though i'd argue that's a contradiction in terms from my struggles to move one recently!) could certainly do with a beefing up. At least the PB's have increased an extra few times.

    They still have a 3 year bond paying 4.2%, payment on maturity. That's such a duff deal.
  • lohr500
    lohr500 Posts: 967 Forumite
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    My wife and I both had the max £50k in Premium Bonds for 2 years commencing Jan 2021.
    Total winnings £1750

    1.75% gain in 2 years. Granted interest rates were lower over that period, but hardly a spectacular return.

    Cashed them all in at the end of 2022 and put the money into a combination of fixed cash ISAs and fixed/easy access savings accounts.Then moved £40k of the taxable savings into new money ISAs for the 23/24 tax year.

    Personally I don't think the chance of a big win outweighs the fact that you can do better with taxable and tax free savings elsewhere. I won't be rushing back to PB unless the real world payout for the average luck participant is significantly higher than it is now. 

    If they add more lower value prizes by reducing the big headline prize values, then I guess the thrill element is reduced and PB become a more predictable tax free form of savings. Even more of a reason to max out ISA allowances, unless the rebalanced PB prize structure offers a real world improvement on beating the return on a similar cash saving placed elsewhere.
  • nic_c
    nic_c Posts: 2,931 Forumite
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    So NS&I are still paying catch-up... Shawbrook are now paying 4.35% and even the best ISAs are 4.1% (Coventry).

    Does anyone else think they should just add £25 prizes? the £1 million is a nice marketing point, but there is almost no chance of winning it! so just keep a single million prize and vastly increase the £25 prizes, that way there is a much better chance of winning something! (yes, I did get less than £100 this month on the max holding :'( )  which is what we are doing by putting our money in premium bonds.
    NS&I will always be behind, as they are not in to leading the market and taking money away from the businesses. Last time they increased the number of £50 & £100 prizes at the expense of £25 ones. Whether they increase more depends on the number of bonds being taken up. If it falls relatively then they'll feel the need to increase further. You would think more lower prices would increase the number of prizes available the most and therefore the odds of winning a prize - in case they want to promote that. Otherwise they'll increase the slightly higher prizes to keep the average amount won up.
  • eskbanker
    eskbanker Posts: 31,561 Forumite
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    Does anyone else think they should just add £25 prizes? the £1 million is a nice marketing point, but there is almost no chance of winning it! so just keep a single million prize and vastly increase the £25 prizes, that way there is a much better chance of winning something! (yes, I did get less than £100 this month on the max holding :'( )  which is what we are doing by putting our money in premium bonds.
    As I recall there was a poster on the main PB winners thread who felt the same way about replacing one of the £1m prizes with £25s, but it really wouldn't make a significant difference to the number of prize winners, which would only increase by less than 0.8%, i.e. not 'vast' at all....
  • nic_c
    nic_c Posts: 2,931 Forumite
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    eskbanker said:
    Does anyone else think they should just add £25 prizes? the £1 million is a nice marketing point, but there is almost no chance of winning it! so just keep a single million prize and vastly increase the £25 prizes, that way there is a much better chance of winning something! (yes, I did get less than £100 this month on the max holding :'( )  which is what we are doing by putting our money in premium bonds.
    As I recall there was a poster on the main PB winners thread who felt the same way about replacing one of the £1m prizes with £25s, but it really wouldn't make a significant difference to the number of prize winners, which would only increase by less than 0.8%, i.e. not 'vast' at all....
    @CompulsiveSaver why do you want more £25, is it because you got under £100 last month. The average monthly win is £125, and the unluckiest 25% would get £50 or less in a month. So next month when you win a couple of £100 prizes or even a £500 will you be back saying you shouldn't have won that much?

    In July's draw there was 5061349 prizes, converting a million into £25 converts one into 40,000 so 5101348 prizes, so instead of roughly a 1 in 24000 it would have been roughly a 1 in 23800.

    The £million was introduced in 1994 (surely in response to the lottery?) and going from 2 to 1 would hamper the appeal. Surely most who have max holdings look at how much they won over the year rather than whether any one month is poor.

    Whilst it's unlikely, introducing a £5 prize (take 500K £25, 250K of each of £50 and £100) creates 9million more prizes and changes 1/24000 to 1/8500. It would also mean those with say £4K would get prizes most months rather than a couple of times a year.

    It depends on what the psyche is. Would winning £5 most month be more or less appealing than £25 a couple of times a year?
  • jaceyboy
    jaceyboy Posts: 232 Forumite
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    lohr500 said:
    My wife and I both had the max £50k in Premium Bonds for 2 years commencing Jan 2021.
    Total winnings £1750

    1.75% gain in 2 years. Granted interest rates were lower over that period, but hardly a spectacular return.

    Cashed them all in at the end of 2022 and put the money into a combination of fixed cash ISAs and fixed/easy access savings accounts.Then moved £40k of the taxable savings into new money ISAs for the 23/24 tax year.

    Personally I don't think the chance of a big win outweighs the fact that you can do better with taxable and tax free savings elsewhere. I won't be rushing back to PB unless the real world payout for the average luck participant is significantly higher than it is now. 

    If they add more lower value prizes by reducing the big headline prize values, then I guess the thrill element is reduced and PB become a more predictable tax free form of savings. Even more of a reason to max out ISA allowances, unless the rebalanced PB prize structure offers a real world improvement on beating the return on a similar cash saving placed elsewhere.
    Im with you on this, looked back for me and I won £1425 since January 2022, and my wife £950 since January 2022, both full holding, waiting for August draw then pulling out £100k to put in a fixed one year at 6.10% giving us £6100 for the year...
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