Savvy savers across the UK are being alerted to a significant November rule change from National Savings and Investments (NS&I) that could impact their Premium Bonds returns.
New British Savings Bonds Launch
Ahead of the Christmas period, NS&I announced a new issue of its British Savings Bonds that have now gone on sale, featuring more competitive interest rates. This development includes fixed-term versions of both Guaranteed Growth Bonds and Guaranteed Income Bonds, offering savers alternative options for their money.
The timing of this rate increase has prompted many Premium Bonds holders to question whether they might see a similar improvement in their prize fund rate prospects. However, financial experts are urging caution rather than celebration.
Premium Bonds Prize Rate Concerns
NS&I has already reduced the Premium Bonds prize rate three times this year - in January, April and August. The current rate stands at 3.6 percent, with the probability of each individual £1 Bond winning any prize remaining at 22,000 to one.
Sarah Coles, head of personal finance at Hargreaves Lansdown, doesn't believe the recent rates hike for other NS&I products will translate to better news for Premium Bonds enthusiasts. She explained: "When NS&I is in fund-raising mode, you can't rule out a Premium Bond prize rate rise, but it doesn't feel enormously likely."
Expert Savings Advice
Coles emphasised that the new bond offerings are specifically designed to attract customers seeking fixed-term arrangements. She noted that only if this strategy fails to meet expectations might NS&I consider enhancing Premium Bonds rewards.
The financial expert painted a concerning picture for the immediate future, stating: "The wider picture is one of very gradually falling rates" and warning that "there's every chance that the next move for the Premium Bond prize is a cut in the coming months."
Perhaps most worryingly for regular Premium Bonds holders, Coles highlighted that "even now, the average bondholder will win nothing in the average month. It means your savings are likely to lose money after inflation."
She recommends that savers regularly review their arrangements, suggesting: "It's always worth taking stock regularly, and considering whether you're still happy with the deal, or whether you'd prefer the certainty of a strong rate in the wider savings market."
Savers are advised to compare current offerings from online banks and saving platforms, where the most competitive deals are typically found, to ensure their money is working as hard as possible in the current economic climate.
