- The Premium Bond prize rate will rise from 3.8% to 4.35% in September – this last rose in July
- The odds will shorten from 22,000 to one to 21,000 to one – but those with lower balances are far less likely to ever win
- It’s also increasing the rates for direct saver and income bonds from 3.45% and 3.4% to 3.75% and 3.69% respectively, as of today – they last rose in May
- NS&I is also increasing the rate across all terms for the British Savings Bonds just a few weeks after they last rose in late July
- Its one-year bond is increasing from 4.72% to 4.82%, two-year bond from 4.7% to 4.81%, three-year bond from 4.68% to 4.83% and 4.75% to 4.85% for its five-year bond
Sarah Coles, head of personal finance at AJ Bell, comments:
“NS&I is pulling out all the stops to attract the cash it needs. It has decided there’s no point tinkering around the edges: a raft of rates had to rise – including pulling the trigger on the big gun of Premium Bonds.
“It’s getting unusually competitive in the short-term fixed rate market – NS&I is offering 4.82% over one year, at a time when the best deal is 4.85%. Given that this is the most popular term to fix your savings over, it’s clearly hoping to persuade rate-chasers to make a small compromise in order to secure a rate that’s 100% backed by the Treasury.
“There are better deals on offer elsewhere – especially if you are fixing for longer – so if the rate is the most important thing to you, you can find a more rewarding home for your money. However, getting so close to the most competitive deals could be enough to tempt some savers into the NS&I fold.
Premium Bonds
“Premium Bond holders will be delighted with the second hike in two months to the prize rate. It’s a decent jump, and is accompanied by a shortening of the odds. For those who have stuck with the bonds through thick and thin, they’ll be grateful things are getting thicker.
“Of course, it doesn’t change the fact that in an average month the average bond holder will win nothing. Those with smaller amounts are even less likely to see anything resembling a return. An FOI submitted by AJ Bell earlier this year revealed that fewer than 1% of all Premium Bond prizes between February 2025 and January 2026 went to accounts worth £1,000 or less – with almost two thirds of all holders never winning a prize.
“Your Premium Bonds will also lose money after inflation, so if you need to hang onto your spending power, you may prefer the certainty of a savings account. If you shop around, there are some great rates available at the moment – particularly from online banks and savings platforms. Those with a longer time horizon for their money may want to consider investing it using a Stocks and Shares ISA, as investing in the stock market has historically done better than cash and the ISA protects any investment returns from tax.
Why has NS&I raised rates?
“The impressive fixed rate deals on offer across the market are partly the result of base rate expectations, but a huge part is banks competing hard for sticky money. Moneyfacts figures show we haven’t seen this many bank accounts beating the base rate since 2012. Three-year and five-year bonds are now offering more than 5%, and shorter fixes are hovering nearby.
“At the same time, NS&I is pushing for a net financing target of £15 billion this financial year. So far, inflows haven’t been much to write home about – and April actually saw more money withdrawn than added. NS&I couldn’t sit back and hope for improvements, so it had to do something fairly striking to move the dial.”
