From the December draw you’ve obtained a decrease likelihood of profitable.

After some huge base fee will increase from the Financial institution of England that noticed the Premium Bond prize fee hit the very best degree since 1999, they’re now on the way in which down.

Right here’s what this implies in your likelihood of profitable, and the way it compares to the most recent greatest purchase financial savings accounts.

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What are Premium Bonds

Premium Bonds are successfully financial savings accounts held with the federal government. Somewhat than getting curiosity again in your financial savings, you’re entered right into a draw with a prime prize every month of £1 million.

Different prizes fluctuate between £25 and £100,000 and if you happen to do win it’s all tax-free. You may learn more about how they work here.

The brand new Prize Fee

From the December 2024 draw, the prize fee is 4.15%. That is down from the 4.4% fee that set in March, lowered from 4.65%.

Because of the speed drop, the chances of profitable will scale back to 22,000 to 1, from the earlier odds of 21,000 to 1. The variety of prizes can be shrinking considerably, virtually 265,000 much less (making a complete of 5.7 million out there, down from virtually 6 million).

The overall prize fund will even lower, this time by £25.6 million (there’s now an estimated whole prize fund of £435 million). That is all the way down to the change in what number of of every prizes can be found.

The variety of £25 prizes will enhance, up by greater than 19,000, however that’s on the expense of cuts on the different ranges.

There are virtually 140,000 much less every of the subsequent degree prizes – £50 and £100. And there are smaller reductions for prizes between £500 and 100,000. There are nonetheless simply two £1 million prizes.

How a lot may you win?

Right here’s how the brand new elevated draw compares to the one at first of March 2024. As you’ll be able to see there are extra “greater worth” prizes, so if you happen to win you’re prone to win extra money than in earlier attracts, however you’re simply as prone to win a prize of some worth

Worth of prizes Quantity and whole worth of prizes in March 2024 Quantity and whole worth of prizes in December 2024 (estimate)
£1,000,000 2 2
£100,000 88 83
£50,000 177 167
£25,000 353 332
£10,000 883 830
£5,000 1,766 1,664
£1,000 18,452 17,426
£500 55,356 52,278
£100 2,212,098 2,072,099
£50 2,212,098 2,072,099
£25 1,490,033 1,509,458
Whole variety of prizes: 5,991,306 prizes 5,726,438 prizes
Whole prize fund: £461,330,525 £435,686,300
Supply NS&I

Earlier Premium Bond prize charges

  • March 2024 – 4.4%
  • September 2023 – 4.65%
  • July 2023 – 4%
  • June 2023 – 3.75%
  • March 2023 – 3%
  • February 2023 – 3.15%
  • January 2023 – 3%
  • September 2022 – December 2022: 2.2%
  • Could 2022 – August 2022: 1.4%
  • December 2020 – April 2022: 1%

What you’ll most likely win

It’s onerous to provide a precise determine in your probably winnings as 4.15% on Premium Bonds doesn’t imply you get £4.15 again for each £100. That’s the typical return in case you have common luck.

In actuality, it’s solely these with near the utmost £50,000 who’re prone to get near this fee (on common – it may very well be kind of). Whereas these with lower than a grand are prone to win nothing in any respect. So that they’re going to be higher choices for these with additional cash, and fewer good for these with smaller quantities.

The MoneySavingExpert Premium Bonds calculator normally offers indication of the wins over a yr. Nevertheless it’s not but been up to date to the brand new prize draw fee, so it’s greatest prevented for now.

And there’s likelihood you’ll get nothing. Because the smallest prize is £25, you’d suppose you’d want £603 saved to get the bottom prize (£603 + 4.15% = an additional £25). However it’s not that easy.

With this fee, the chances of a bond (not an individual) profitable one thing are 22,000:1. Meaning for each 22,000 bonds, just one bond will win a prize and 21,999 bonds gained’t.

How they evaluate to financial savings accounts

The best paying easy-access financial savings account proper now with no restrict on the steadiness is from Sidekick, paying 4.89%. That’s higher than the Prize Fee of 4.15%, and it’s a assured return on all balances.

And there are even greater paying choices with some restrictions. Santander pays 6% on as much as £4,000 on its Edge Saver (although it requires a present account) whereas the regular saver from Principality provides 8% (although solely on £200 a month for six months). These are probably higher bets in your preliminary deposits.

Plus, the highest one-year repair remains to be round 4.8% – so if you happen to don’t suppose you’ll want the cash for a yr then these may very well be a greater choice.

Nevertheless it’s price noting that any prizes gained by way of Premium Bonds are tax free. With rates of interest rising it may very well be you’re nearer to going over your personal savings allowance, so cash in Premium Bonds may assist you keep away from tax.

Or if you happen to’re an extra fee taxpayer then it’s an choice as a substitute or in addition to ISAs.

What about future curiosity cuts?

There have been 14 successive interest rate rises from the Financial institution of England between December 2021 and August 2023 – the place it was held at 5.25% till August 2024. It’s since dropped to five% and an extra lower is anticipated this yr.

If that occurs, it can imply most, if not all, financial savings accounts will react and transfer their charges down. Mounted charges have already dropped in anticipation and are at their lowest degree in a yr.

This might imply that the highest quick access charges from the banks will drop beneath this new Premium Bonds prize fee. However in fact, NS&I may additionally then drop the prize fee for Premium Bonds once more.

Shopping for Premium Bonds

When to purchase Premium Bonds

For those who’re tempted by the elevated fee, there’s one essential rule it’s essential to learn about. Your cash must have been held in Premium Bonds for a full month earlier than it’s entered right into a draw.

Meaning this December draw will solely be for anybody who saves previous to the tip of October 2024. It additionally means it is sensible to deposit cash proper on the finish of a month than at every other time.

Methods to purchase Premium Bonds

You purchase PBs from NS&I website or over the telephone at a value of £1 every, however you must purchase not less than £25 price. You must be over 16 years previous to purchase Premium Bonds for your self. If you’re shopping for them for youngsters, the account might be held by the mother and father/authorized guardians till the kid reaches 16.