UPDATE: |Premium Bonds rates could rise as NS&I decision marks ‘big shift’ News

NS&I has raised a raft of the rates on its British Savings Bonds this week

Premium Bonds holders who have been disheartened by the recent dip in their prize fund rate might soon see a welcome uptick. Currently, the rate is at 3.8%, having decreased from 4% since the April draw.

This follows previous reductions in December and January, mirroring the downward trend in interest rates across the savings sector. However, in more positive news for savers, NS&I has upped several rates on its British Savings Bonds this week and has brought back two previous Bond products.

Some financial pundits are predicting that a boost to the prize fund rate could be imminent as a result. Matthew Parden, CEO and co-founder of savings firm Marygold & Co., said: “NS&I has a history of adjusting the prize fund rate in response to market demand and funding requirements.

“If these newly improved guaranteed-rate products start to divert savers’ attention away from Premium Bonds, it wouldn’t be surprising to see the prize rate rise later this year to retain their appeal.”

He noted that the rate hikes on British Savings Bonds are likely part of NS&I’s strategy to hit its Net Financing target for 2025-2026, which was outlined by the Government in the recent Spring Statement for 2025–26. The target is set at £12billion, marking a 33% increase from the previous year.

NS&I has increased the rates on these Bonds:

• Guaranteed Growth Bonds 2-year (Issue 73) – 4% (up from 3.6%)
• Guaranteed Income Bonds 2-year (Issue 73) – 4% (up from 3.6%)
• Guaranteed Growth Bonds 3-year (Issue 75) – 4.1% (up from 3.5%)
• Guaranteed Income Bonds 3-year (Issue 75) – 4.1% (up from 3.49%).

These products have also been reintroduced with increased rates:

• Guaranteed Growth Bonds 1-year (Issue 84) – 4.05% (up from 3.95%)
• Guaranteed Income Bonds 1-year (Issue 84) – 4.05% (up from 3.88%)
• Guaranteed Growth Bonds 5-year (Issue 67) – 4.06% (up from 3.4%)
• Guaranteed Income Bonds 5-year (Issue 67) – 4.06% (up from 3.39%).

Mr Parden said these increases are a significant move. He explained: “NS&I’s decision to increase rates across eight of its Bond products and relaunch the 1 and 5-year British Savings Bonds, marks a significant shift in the UK’s savings landscape.

“With returns now reaching up to 4.1%, these fixed-term options are far more competitive, especially for cautious savers looking for guaranteed income during a time of ongoing economic pressure. The return of the 1 and 5-year terms, not available together since 2010, gives savers greater flexibility to align products with their financial goals.”