SAVERS could have a greater chance of hitting the jackpot as a shake-up to Premium Bonds has made it easier to win.
NS&I has added an extra 1.4million prizes to its monthly prize fund, making it more likely that Premium Bond holders will get some good news from Ernie.
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Premium Bonds are a type of savings account backed by the Government.
But instead of getting a fixed rate of interest like you would from a high street bank, your money is entered into a prize draw each month.
Savers can bag prizes ranging from £25 up to a jackpot of £1million.
And now a change to the draw has made it easier to win.
Premium Bonds pay an effective interest rate of 1% – this is calculated based on average the likelihood of your winning, but comes with no guarantees.
So if you have £1,000 saved, it is estimated that you can expect to win prizes to the value of £10 a year on average.
From June, this rate will go up to 1.4%.
The odds of each £1 Premium Bond number winning a prize will improve from 34,500 to one, to 24,500 to one.
From June, it is estimated that an extra 1.4 million prizes will be paid out.
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There are likely to be 10 pay outs of £100,000 next month, up from just six in May.
Some 19 lucky winners will bag £50,000, while 98 savers will pocket £10,000.
Each month, two winners will claim the £1 million jackpot – but the chances of netting the top prize is just one in 58.9million.
And there is no guarantee that you’ll win anything at all – in fact, on average, those with £1,000 saved in Premium Bonds will win nothing, according to Hargreaves Lansdown.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “If you hold the bonds, you won’t make 1.4%. Those with better-than-average luck will make more, and those with less luck can go decades without a win.”
In it to win it
Premium Bonds were launched 65 years ago and more than 21 million savers now have money in the product.
Coles said: “People are attracted by the chance of a life-changing win, the fact that prizes are tax-free and the fact that money in Premium Bonds is backed 100% by the Treasury.
“But you need to understand what you’re giving up – you don’t make any interest on money in Premium Bonds so the spending power of your money is being eroded.
“And as more people buy more bonds, unless the number of million pound prizes increases, the odds will get worse.”
Recent increases to the Bank of England base rate mean that some savings rates have been rising.
Marcus and Nationwide are among the banks and building societies which have nudged up interest rates on savings accounts.
But savers are still seeing a real terms loss on any cash stashed in the bank, as soaring inflation means the cost of living is rising at a far quicker rate than their savings.
This month, inflation reached a 40-year high of 9% and it is expected to climb further.
That means it’s more important than every to make sure your money is working hard for you.
According to MoneySavingExpert, the most generous easy-access savings account currently available is from Chase Bank, and pays interest of 1.5%.
If you’re happy to tie your money up for six months you can get 2% interest from Shawbrook Bank, and Vanquis Bank pays 2.62% if you lock your money in for two years.
NS&I chief executive Ian Ackerley said: “The new prize fund rate ensures that Premium Bonds are priced appropriately when compared to the interest rates offered by our competitors.”
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