MILLIONS of savers could be better off thanks to a big change to a popular account.
The prize fund rate for Premium Bonds increased to 3.3% in March.
This means customers with savings in NS&I's variable rate accounts have seen a boost in their savings in the last month.
The rate has risen five times within the last year.
The rate rose from 3.15% in February this year to 3.3% in March.
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The prize fund rate rose from 2.2% to 3% in January 2023.
In October the rate was at 2.20% and in June it was 1.40%.
Rates are rising generally across other savings accounts and so premium bond rates going up too will be a welcome rise for savers.
What are Premium Bonds?
Premium Bonds are a way to save but are different from a savings account because they don’t offer interest - more than 22million people have them.
Instead, you’re in with a regular chance to win a prize with as much as £1million up for grabs.
Premium Bonds can be bought from the government-backed National Saving and Investments (NS&I) which also offers a variety of savings products too.
You can put money in and take it out whenever you want.
You need to put in a minimum of £25 to get started and you can invest up to £50,000.
Each £1 you put in Premium Bonds is an entry in to the monthly prize draw.
Because Premium Bonds are government-backed, your money is safe and there's no risk of losing your cash.
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What are the Premium Bond prizes?
The draw is held each month and the winning number is pocked by a computer called ERNIE (which stands for electronic random indicator equipment).
There are three kinds of prizes as follows:
- Higher value prizes of £5,000, £10,000, £25,000, £50,000, £100,000 and £1million
- Medium value prizes of £500 and £1,000
- Lower value prizes of £25, £50 and £100
How likely am I to be a winner?
The chance of winning a prize, with an individual bond, is 24,000 to one.
Each bond has an equal chance of winning and the more you buy, the more your chances improve.
Most Premium Bond savers will find that their investments fail to keep pace with inflation, but it's hard to find savings accounts that beat inflation too.
You can check your odds depending on how many bonds you have and how long you'll keep them using this helpful calculator from MoneySavingExpert.
That makes it easier to see if Premium Bonds are right for you, or if you'd be better off with other forms of savings.
It's also worth noting that Premium Bond winnings are tax free.
Anyone who has used up their annual ISA limit and the personal savings allowance might want to look at Premium Bonds for savings.
How do I check if I have won?
You can use the NS&I Premium Bond prize checker online to see if your numbers have come up.
You'll need to know the numbers of your Premium Bonds which can be found on your Bond record or through your online account.
If you've lost track of your numbers you can ask NS&I for them.
There's also an official app for iPhones and for Androids for checking prizes too, and even an App for Amazon Echo which means you can just as Alexa.
For this you will need to use your NS&I number rather than each Premium Bond number. It's 11 digits long and will be on any communication you've had with NS&I.
You don't always need to check your numbers as you can get prizes under £5,000 paid straight into your bank account, or automatically buying more Premium Bonds.
For higher value prizes worth more than £5,000 NS&I will contact you by post and if you sco0p the £1million jackpot, someone will pay you a visit to let you know!
NS&I will no longer be sending out prize cheques in the post from Spring 2021.
Anyone who gets their prize this way needs to provide their bank details to NS&I.
How do premium bonds compare?
Before you sign up, it's important to check how it compares to the rest of the market to make sure you get a good deal.
We used MoneyFacts to compare NS&I's rate for its Direct Saver account to other easy-access accounts on the market today.
Chip's easy access saver is currently offering 3.40% interest - which is pretty much the highest of those accounts out there right now.
While savers could open a Leeds Building Society fixed rate cash ISA and get 4.20%.
Or you could get a one-year fixed rate with Isbank Raisin for 4.10%.
So it's worth weighing up to see what's best for you.
Always compare accounts before opening one and make sure you understand how much you could save over a period of time.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk