NS&I: Premium Bonds UK prizes rate at risk as NS&I slashes rates on saver accounts - what it means for holders
Recent NS&I rate cuts put pressure on Premium Bonds savers across the UK 💸
- NS&I is cutting rates on its Direct Saver and Income Bonds from 3.3% to 3.05% from February 12
- Premium Bonds prize fund rate of 3.6% remains unchanged for now, but future cuts are possible
- Odds of winning with Premium Bonds are 22,000 to one per £1 entered into the monthly draw.
- Falling Bank of England base rates are driving widespread reductions in savings returns
Premium Bonds holders could be heading for a period of smaller returns, with fresh cuts from NS&I raising fears that the popular prize-based savings product may not be immune for much longer.
While the Premium Bonds prize fund rate itself has been left untouched for now, recent moves elsewhere in NS&I’s range are putting savers on alert.
The provider has confirmed that rates on two of its easy-access accounts will be reduced from next month, a sign, many experts say, of the direction of travel across the wider savings market.
Premium Bonds currently offer a prize fund rate of 3.6%, after a series of cuts last year in January, April and August. The odds of winning stand at 22,000 to one for each £1 Bond entered into the monthly draw.
Instead of guaranteed interest, savers are entered into a prize draw that pays out everything from £25 to two £1 million jackpots every month.
What’s happening to NS&I savings rates?
NS&I has announced it will reduce the rate on its Direct Saver and Income Bonds from 3.3% to 3.05%, with the changes taking effect from Thursday, February 12. This marks the first time these two rates have been altered since March 2025.
Andrew Westhead, NS&I’s retail director, said the move reflects shifting conditions in the savings market.
"We keep all our savings rates under review as market conditions change. [These] changes will help us meet our net financing target whilst continuing to balance the interests of our savers, taxpayers and the wider financial services sector,” he said.
Could Premium Bonds be next for cuts?
For Premium Bonds holders, the immediate relief is that their prize rate hasn’t been cut yet. But analysts warn this may only be a temporary reprieve.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: "Holders will be glad NS&I has chosen this approach, rather than cutting the Premium Bond prize rate. However, they're not out of the woods just yet.
"NS&I will have an eye on ensuring the prize rate isn't offering significantly more than the easy access market, so if we see more widespread cuts, Premium Bonds could be next for the chop."
Why savings rates are falling
That risk is growing as savings rates across the board drift downwards. Many providers have been trimming rates in response to falling interest rates set by the Bank of England.
The base rate now stands at 3.75%, after six cuts from its peak of 5.25% in August 2023, including four reductions during 2025.
In the meantime, Premium Bonds continue to attract millions of savers with the lure of tax-free prizes. Draws take place at the start of each month, with two £1 million jackpots up for grabs, alongside prizes of £100,000, £50,000 and smaller amounts.
Bond holders can check whether they’ve won using NS&I’s online prize checker or mobile app. The first two £1 million winners of this year came from Suffolk and Berkshire.