NS&I investors now have less chance of winning a prize.
National Savings & Investments (NS&I) is to reduce its premium bond prize fund in line with the 150 basis point reduction in interest rates by the Bank of England. The government-backed group said the fund rate would be cut by just over one percent from December 1st, bringing it to 1.8 percent.
The total monthly value of prizes will drop from £87.8 million to £57 million. For savers, this means the odds of winning a prize will be lengthened to 36,000/1 per £1 bond. Someone with the maximum £30,000 invested can now hope to win around ten prizes a year compared to 15 previously.
NS&I will continue to give away two £1 million jackpot prizes each month, although the over number of premium bond rewards will drop from 1.54 to 1.1 million. Also in line for cuts are the returns on NS&I's income bonds and investment accounts, as well as the interest rates on its cash ISA and easy access savings account.
Despite this, the group remains confident that savers will be attracted to the security offered by its savings and investment products. Indeed, NS&I is able to able to offer a 100 percent guarantee to savers that their deposits will be safe, no matter how much they invest, since the group is backed by the Treasury.