October’s premium bond draw has increased with an extra 500,000 prizes up for grabs.
The move means the chances of winning a prize has increased from 1% (or 36,000 to 1), to 1.5% (or 24,000 to 1). There are currently 23 million premium bond holders.
National Savings & Investments (NS&I) – the government-backed bank that offers premium bonds – expects to pay out £52 million in prizes next month, up from £33 million in September.
The total number of prizes up for grabs has increased by from 1.1 million to 1.7 million. However, the majority of prizes (89%) will be for cash amounts of between £25 and £500. Just 6% will be for more than £5,000 and there is only one £1 million jackpot each month.
A further 5% of prizes will be for £500 to £1,000 prizes.
Peter Cornish, director of customer offer at NS&I, says it reviews the premium bond prize draw each month to ensure it “balances the interests of savers, the taxpayer and the stability of the wider financial services market”.
In March, NS&I cut its prize rate from 1.8% to 1% in response to the Bank of England cutting the base rate to just 0.5%.
Cornish adds: “Premium nonds are hugely popular with our customers and we know that winning prizes frequently is particularly important to them.”
What are premium bonds?
Premium bonds are offered by National Savings & Investments (NS&I) and are open to investment from anyone aged 16 or over. You can, however, buy premium bonds on behalf of your children or grandchildren.
You'll need at least £100 to invest in premium bonds (or £50 if you buy by monthly standing order), and the maximum investment is £30,000.
Although you won't earn any interest on your capital, every month NS&I holds a prize draw with a £1 million jackpot and one million tax-free prizes. Clearly, the more bonds you hold the more chance you have of winning.
By investing your money with NS&I you'll benefit from the government's 100% protection guarantee. Around 23 million people hold premium bonds worth a collective £26 billion.
NS&I describes premium bonds as "a fun, yet serious way of saving, combining the chance of winning tax-free prizes with the peace of mind that comes from knowing your capital is 100% secure".
You can cash in your bonds at any time.