Should Preium Bond prizes be increased now interest rates are so high?

JMarco

NS&I reduced interest rates and Premium Bond prizes when interest rates were low. Now the rates are high, isn't it time to increase Premium Bond prize money?

Sg28

Yes, Premium Bond prize money should be increased

They have been, August seeing the latest one.

This year has seen 5 increases so far. Last year there were 2. 

https://www.nsandi.com/historical-interest-rates

eskbanker

As above, they've done nothing other than increase rates in recent times - just over 14 months ago the nominal PB rate was 1% and now it's 4% after a sequence of increases.

However, they don't necessarily aim to correlate with base rate changes, as they're also driven by their net financing target set by the treasury, so they're not always looking for additional deposits, whereas many of their competitors chase market share as a matter of course.

Albermarle

eskbanker said:

As above, they've done nothing other than increase rates in recent times - just over 14 months ago the nominal PB rate was 1% and now it's 4% after a sequence of increases.

However, they don't necessarily aim to correlate with base rate changes, as they're also driven by their net financing target set by the treasury, so they're not always looking for additional deposits, whereas many of their competitors chase market share as a matter of course.

Although I guess when the PM/Chancellor are pressurising the big banks to pass on rate increases, they feel obliged to be at least going in the same direction with NS&I rates.

eskbanker

Albermarle said:

eskbanker said:

As above, they've done nothing other than increase rates in recent times - just over 14 months ago the nominal PB rate was 1% and now it's 4% after a sequence of increases.

However, they don't necessarily aim to correlate with base rate changes, as they're also driven by their net financing target set by the treasury, so they're not always looking for additional deposits, whereas many of their competitors chase market share as a matter of course.

Although I guess when the PM/Chancellor are pressurising the big banks to pass on rate increases, they feel obliged to be at least going in the same direction with NS&I rates.

True, from a (current) political point of view, it might be wise for the government to be seen to be keeping pace with the market that they're simultaneously castigating, but in more general terms PBs have never been a tracker product as such.

bompey

As a PB holder then yes they should increase the prices, but they have already been doing that, and will probably increase them again from the 4% they are now.

RedImp_2

Find it slightly odd someone creates an account to post this poll.

In any case imho doesn’t actually matter what we poll on here, not going to effect the powers that be.

Sg28

Yes, Premium Bond prize money should be increased

RedImp_2 said:

Find it slightly odd someone creates an account to post this poll.

In any case imho doesn’t actually matter what we poll on here, not going to effect the powers that be.

Next post will probably be ramping some crypto scam.

Swipe

Yes, Premium Bond prize money should be increased

Why would anyone vote against this?

Johnjdc

No, Premium Bond prize money is ok as it is.

Swipe said:

Why would anyone vote against this?

I voted against it because the premise is faulty and I rejected the argument that "it's time to increase" when there have been multiple increases throughout the last year. 

As a Premium bond holder I'd be delighted if they went up, but at 4% they are in the ballpark of instant access, particularly so when considering that they are tax-free. 

As a higher rate taxpayer that means (assuming average winnings) the government is giving me £50k of savings at the equivalent of about 6.7% taxable already, instant access.

They are a government investment scheme, so any increase over and above what they need to give to remain competitive comes out of higher taxes or lower spending on services.