Premium Bonds: Are they worth it? Option now pays 40% more – ‘victory and disappointment’
The annual prize fund rate on Premium Bonds has recently been increased from one percent to 1.4 percent. It means the rate of return on the option has increased by 40 percent.
With inflationary pressures and financial challenges, many will be wondering which option is right for them.
Ed Monk from Fidelity International offered his verdict on Premium Bonds, and whether they are worth it.
He said: “I can report that, 14 months after purchasing my Premium Bonds, my return in prizes has given me an annual rate of return that almost exactly matches the one percent prize fund rate.
“From one point of view, that’s a victory.
READ MORE: Britons could slash tax bill by ‘up to £1,220’ but thousands miss out
However, that is not to say Premium Bonds will no longer be suitable for Britons.
Some will be comfortable in sacrificing an interest rate for the chance of potentially securing the £1million prize.
Ian Ackerley, NS&I Chief Executive, recently commented on the increase to the prize rate fund.
He said: “The new prize fund rate ensures that Premium Bonds are priced appropriately when compared to the interest rates offered by our competitors.
“It also ensures that we continue to balance the interests of savers, taxpayers and the broader financial services sector.
“Premium Bonds customers will benefit from the chance to win a further 1.4 million tax-free prizes each month, as well as the peace of mind that customers get with 100 percent of their NS&I savings being backed by HM Treasury.”
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