Savers are being warned that they “can’t count on” on Premium Bonds anymore following National Savings and Investment’s (NS&I) decision to slash its prize fund rate.
Yesterday (October 22), the financial institution confirmed the rate attached the popular savings product would be cut from 4.4 per cent to 4.25 per cent as part of December’s prize fund draw
It is estimated that this latest move from NS&I will result in 265,000 less prize winners in the final monthly prize draw of the month.
Under Premium Bonds, bond holders are rolled into a monthly draw with two lucky individuals taking home the £1million jackpot prize.
There are other cash prizes up for grabs of lesser amounts, including £100,000, £50,000 and £10,00.
Slashing the prize fund rate means the chances of someone winning any of the available prizes has dropped to 22,000 to one.
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Bank and building society have enjoyed a period of high interest rates on savings accounts following recent action from the Bank of England.
The central bank raised the country’s base rate to 5.25 per cent in an attempt to rein inflation, cutting it to five per cent in August.
Despite this boon for traditional savers, Premium Bonds remained one of the most popular savings products in the country.
However, Steven Kibbel claims NS&I customers “can’t count on them [Premium Bonds] as a solid way to grow your savings anymore”.
The financial planner and chief editorial advisor at Gold IRA Companies said: “We’ve already seen cuts, and more could follow.
“NS&I adjusts its rates depending on a lot of factors, and they’re not immune to the economic shifts we’re all dealing with.”
He urged Britons to examine where their savings cash are invested and whether they could get a better return elsewhere.
Kibbel added: “It’s smart to keep an eye on alternatives and spread out where you put your money.
“Relying on Premium Bonds alone doesn’t cut it for most people these days. You want stability, and unfortunately, Premium Bonds just aren’t offering that right now.”
On the rate cut, Andrew Westhead, NS&I Retail Director, said: “As the savings market continues to change, we need to lower the rates on some of our products to help us meet our Net Financing target, while also ensuring we continue to balance the interests of our savers, taxpayers and the broader financial services sector.
“Even with the changes, we’re still expecting to pay out over 5.7 million prizes worth over £435 million in the December Premium Bonds draw.
“Our portfolio of both fixed and variable rate products, plus the unique position of Premium Bonds, continues to give savers the choices they need to help reach their savings goals, backed by the safety and security of our 100% HM Treasury guarantee.”
