Every month, some lucky individuals can win upwards of £1million thanks to the National Savings and Investments (NS&I) prize lottery. Recent changes to the savings product’s prize fund rate mean that the odds of someone winning the jackpot have now changed.
For this month, two winners received the £1million prize with many savers wondering if they will do the same in August via NS&I’s lottery.
Earlier his year, the financial institution revealed it was hiking the prize fund rate for Premium Bonds.
After this increase, the savings product’s prize fund rate was raised from one percent to 1.40 percent.
This hike was introduced as of June 2022’s prize draw and will continue to be the account’s rate going forward.
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Many people who invest in Premium Bonds are now wondering if their odds of winning the £1million jackpot has increased since this change.
Compared to savings products with traditional banks, no normal interest is earned on the account as there is instead a monthly prize draw for cash prizes.
The most a person can take home from Premium Bonds in a single month is £1million, with two jackpot payouts usually given out to two bond holders a month.
Among the other sizeable cash prizes someone can win through NS&I’s investment product are £100,000, £50,000 or £25,000.
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Before the prize fund rate rise, the odds of each £1 Premium Bond number winning a prize was 34,500 to one.
After the NS&I decided to hike the rate, the odds have now changed to 24,500 to one in a boon for savers.
This means that bond holders will see their odds improving of taking home one of the cash prizes each month.
NS&I estimated that the hiked prize fund rate would result in an extra 1.4 million prizes paid out in last month’s draw.
Sarah Coles, a senior personal finance analyst, Hargreaves Lansdown, warned that people need to be aware of how NS&I’s product works to determine what their odds of winning will be.
Ms Coles explained: “You need to understand what you’re giving up. You don’t make any interest on money in Premium Bonds.
“And while at a time of low inflation you may feel this is a small price to pay for the chance of a big win, while inflation is running so hot, it means the spending power of your money is being eroded far more quickly. It means holding Premium Bonds comes at a higher cost.
“You also need to appreciate that the prize rate is not the same as the returns you can expect.
“If you hold the bonds you won’t make 1.4 percent. Those with better-than-average luck will make more, and those with less luck can go decades without a win.”
She added: “In an average year, someone with £1,000 in the bonds will win nothing. It’s worth knowing the chances of a win too.
“While the chance of any win at all with a £1 bond is 24,500, in May, the chances of winning £1 million were 1 in 58.91 billion – which is vanishingly small.
“Even after the prize rate changes, there will still only be two million pound prizes, so the odds of winning a million haven’t improved – in fact as more people buy more bonds, unless the number of million pound prizes increases, the odds will get worse.”
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