NS&I Cuts Premium Bond Prize Fund

by Peter Wakeford
Posted by Hannah on 19 November 2008
NS&I Cuts Premium Bond Prize Fund

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.

Compare Savings Accounts now via money.co.uk.

Get our free money saving newsletter
Join over 480,000 other subscribers who grab our expert money tips, unmissable money guides & hottest bargains each week in our special email...
Terms & Conditions
 
13

Your Comments

SussexMan
on 13 Feb 2009 15:42
I've had the max for 5 years. The biggest prize I've had is £100 - but I average £200 - £250 a month tax-free in bits and pieces. Sure there's fixed rate accounts around - I climbed in at 7% last year,. I agree two £1m prizes is not a good idea, and that one of those millions should be shared around at lower levels. But I get the feeling some Bondholders are either too greedy or lack patience.
 
Another Victim
on 2 Feb 2009 12:55
I agree with the Victim's comment's drop the top prize to 1M give us all a chance to win somthing.The top prize's dropped befroe xmas I wonder why perhaps to help the rich bankers
 
KeithT
on 1 Feb 2009 17:12
It makes you wonder if the big winners are sellected by the Government instead of being a randomly picked choice. I know loads of people with the full amount, including my daughter and have never heard of any of them winning a large amount. 50's and 100's yes, but that's it. The government are worse than scrooge when it comes to paying interest. I wouldn't be surprised if Mr Brown hasn't already spent the kitty on things he shouldn't have. Time to withdraw them and buy gold me thinks.
 
eric silk
on 9 Jan 2009 13:14
it woul be better to drop the 2 million down to 1million and have more prizes 50,000 to 100,000 prizes which would have a much better feel.
 
Steve Brown
on 7 Dec 2008 11:16
I think the NSI has got this decision completely wrong. Yet again the savers are to be punished for the greed of the banks and the spenders. I will certainly be looking to move my money.
 
Macy
on 4 Dec 2008 17:20
I support the more the merrier idea, in the current financial situation,I personally think that NS&I should consider 'making more investors happy' by spliting the two big prizes into many more smaller prizes. Isn't more people get something and get it more frequent better than upset most of their customers ?
 
Andy Campbell not happy
on 4 Dec 2008 09:13
ive just cashed in £27500 worth of premium bonds and paid it off my mortgage, after winning nothing in the dec draw, the prizes are dismal now and not worth the gamble, i feel the money invested is helping the rest of the financial sector and they are not looking after thier own investors.
 
william keep
on 4 Dec 2008 08:56
why not chage lenders more then you can get more savings in THANKING YOU
 
The Victim
on 2 Dec 2008 10:24
If they are hitting investors so badly in the name of interest cuts, then here’s another idea they should think of. How about reducing the jackpot of £1m from two to one and split the remaining £1m into smaller prizes between £50 and £100,000. That way at least some holders will have a chance to win something - which is better than nothing. The current downturn in the economy is understandable but we never hear about cuts for those who are responsible for this turmoil. And if this trend of unfairness towards investors continues I really have to think of alternative ways to invest my money. Where?. Well, not in this country at least!
 
korkyb
on 22 Nov 2008 10:20
I have had 30k invested in premium bonds for three years now and the most I have ever won is £250, I would like to know where all the big prize money goes. I think its time to reinvest somewhere else. I am sure I can get better for my money.
 
Sun-uk
on 20 Nov 2008 07:16
NS&I are backed by the treasury but where does the profit go. Who benefits from the profits? the government or some back office management team??
 
J Earnshaw
on 19 Nov 2008 23:21
At 1.8% interest on Premium Bonds I do not share NS&I confidence that savers will still be attracted to any of their products. I for one will be withdrawing from this rip off. Maximum investment of £30k is likely to return only £550/annum if lucky whilst still possible to earn 6% on fixed rates returning £1800/annum. Although taxable there is still the £50k guarantee on most bank deposits. From 20 years experience in Premium Bonds, average annual return has been only 2.8%, maximum prize received £100. Basically cost me a fortune and 1.8% is the final straw.
 
Poor Man
on 19 Nov 2008 20:54
Well, with the ISA rate being so low, I am bowing out