The odds on winning a prize in the monthly Premium Bonds prize draw are changing this month. Announced back in September this year, the cut to the annual prize fund interest rate will come into effect on November 24.
The announcement cam several months after NS&I cancelled some previously planned interest rate cuts, in response to the coronavirus pandemic, with the original reductions having been scheduled for May 1 this year.
They would have seen the annual prize fund rate reduce by 10 basis points to 1.30 percent – meaning the new odds would have stood at 26,000 to one.
In September, Ian Ackerley, NS&I Chief Executive, said: “Reducing interest rates is always a difficult decision.
“In April we cancelled interest rate reductions announced in February and scheduled for 1 May.
“Given successive reductions in the Bank of England base rate in March, and subsequent reductions in interest rates by other providers, several of our products have become ‘best buy’ and we have experienced extremely high demand as a consequence.
“It is important that we strike a balance between the interests of savers, taxpayers and the broader financial services sector; and it is time for NS&I to return to a more normal competitive position for our products.”
Each month, some details about the Premium Bonds prize winners are released.
While NS&I maintains anonymity for those who have secured a prize, the general locations of where people who won are based are published.
It’s something which NS&I has addressed on its Adviser Centre.
The government-backed savings provider addressed that while Bond numbers are chosen at random, with an equal chance of winning, some may think more recently Bonds come up top more often.
It seems this is a popular query, as in a Frequently Asked Questions section, NS&I has published the question: “Are the winning Premium Bonds the ones bought most recently?”
Shedding some light on the situation, NS&I states: “Each £1 Bond number has an equal chance of winning, regardless of when or where it was bought.
However, when a substantial proportion of number of eligible Bonds were bought could lead some to come to this – incorrect – conclusion.
“Over 95 percent of eligible Bonds have been bought since the year 2000.
“So even though Premium Bonds have been on sale for over 60 years, this is why newer Bonds seem to win more frequently.
“When ERNIE randomly generates winners, it doesn’t store any numbers, so there’s no way any Bonds can be left out.
“In 2004 the £1million jackpot was won by a customer with only a £17 holding, who bought them in 1959.”