NS&I Premium Bonds customers handed news that's a 'significant blow'

Premium Bonds customers have been urged to consider ditching their accounts before January as a rate change takes place. NS&I has announced a reduction in its Premium Bonds prize fund rate to four per cent from January.

The move comes as part of broader reductions across NS&I's savings products, including its Direct Saver and Income Bonds. The Government-backed savings provider will maintain the odds of winning at 22,000 to one, despite the rate cut.

Laura Suter, director of personal finance at AJ Bell, notes that NS&I has "joined the troops of other savings providers cutting interest rates, as the savings market cools after a bonanza couple of years." Ms Suter warned: "The rates are now significantly below the top rates in the market, meaning savers are paying a decent premium for the safety and brand name of NS&I.

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"Anyone with money in easy-access NS&I accounts should weigh up whether they would be better switching to a rival to clinch some extra interest. Savers with money in Premium Bonds should really think about whether the account is right for them.

"Considering many Premium Bond holders will never will a prize and the average expected return is lower than the top easy-access account, savers could well be better off with a guaranteed return elsewhere." There are 24 million Premium Bonds holders in the UK currently.

NS&I is one of the largest savings organisations in the UK, offering a range of savings and investments to 25 million customers. All products offer 100% capital security as NS&I is backed by HM Treasury. The January 2025 Premium Bonds draw is expected to have over £431 million in the prize fund with over 5.8 million prizes, ranging from two £1 million prizes to over 1.8 million £25 prizes.

It comes after the December win rate cut was confirmed.