Premium Bonds BONANZA as NS&I adds £80million to prize pool from January 2023

The biggest Premium Bond prizes in years are to be handed out to savers as National Savings and Investments tracks record rises in interest rates.

NS&I's monthly prize-fund rate will increase to 3% from 2.2% in January 2023 as an extra £80 million in prizes will be up for grabs.

Premium Bonds are a savings account you can put money into, where instead of being paid interest, tax-free prizes are awarded in a monthly draw - prizes range from £25 to £1 million.

But the nearest thing Premium Bonds have to an interest rate is their annual prize rate.

Premium Bond prizes range from £25 to £1 million
NS&I

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.

It’s estimated that the number of £100,000 prizes will triple from 18 to 56, the amount of £25,000 prizes will increase from 71 to 223, alongside the two monthly winners of the £1 million dream prize.

Smaller prizes such as £50 and £100 will also rise by nearly 400,000 each but the number of £25 prizes is set to fall by around 900,000.

But while the rise is good news, with the 3% Premium Bond prize-fund rate out-paying today's top easy-access savings rate of 2.85%, most people with typical luck won't get a return of 3%, even with the maximum £50,000 invested according to Money Saving Expert.com

NS&I chief executive Ian Ackerley said: "The New Year increase to the Premium Bonds prize fund rate will mean that customers will have seen the prize fund rate triple in less than a year.

“This means a bigger prize pot and more higher value prizes for our customers – a great way to start 2023."

The odds for winning a Premium Bond prize remains at 24,000-to-one
NS&I

For most savers with ‘average luck’, and who don't pay tax on savings interest, normal savings are still likely to beat Premium Bonds because savings pay a constant and reliable rate of interest.

Even with the increase in savings rates in recent months, the majority of people don't pay any tax on savings interest due to the personal savings allowance, so tax-free Premium Bond prize winnings won't make much difference to many.