NS&I Premium Bonds Prize Fund Rate Set to Increase: What Holders Need to Know

National Savings and Investments (NS&I) has announced that the prize fund rate for Premium Bonds will rise to 3.80% from the July 2026 draw. This change affects over 22 million holders, who will also enjoy improved odds of winning, with the chance now shortened to 1 in 22,000 from the previous 1 in 23,000.

It’s important for savers to understand that the prize fund rate is variable and closely linked to the Bank of England’s base rate. Jennifer Crichton, senior wealth planner at Killik & Co, emphasizes that fluctuations are normal and savers should not assume rates will remain steady. “As interest rates have fallen recently, so has the effective rate for Premium Bonds, and the reverse is now happening,” she explains.

For those relying significantly on Premium Bonds, Ms. Crichton advises diversifying savings. She recommends a three-pot savings strategy:

Emergency Fund: Cash savings covering three to six months of essential expenses for immediate access. Premium Bonds are suitable here because they are government-backed and can be redeemed on request.
Near-Term Goals: Money likely needed within three to five years for specific expenses such as planned purchases.
Long-Term Savings: Funds not required for at least five years, where investing—such as through Stocks and Shares ISAs—can offer better growth potential while managing inflation risks. Although investments carry risk, they provide tax-efficient options for long-term wealth building.

The July 2026 draw will also see a significant boost in prizes, with an estimated 322,000 additional prizes and an increase of over £60 million in the prize pot. This includes 12 extra £100,000 prizes, 24 more £50,000 prizes, and 49 additional £25,000 prizes compared to May 2026.

Maintaining distinct savings pots ensures Premium Bonds remain a liquid, low-risk component of a well-rounded savings strategy, while other investments can work to enhance long-term growth.