More winners and better rates from NS&I

Hot on the heels of an increase to the NS&I British Savings Bonds rates, which happened at the end of last month, NS&I has now announced a further boost for savers, with improvements to Premium Bonds and increases to rates across four of its variable savings accounts.

Immediate increases to NS&I variable rate savings accounts

The changes occurring immediately are increases to the easy access Direct Saver and Income Bonds accounts, as well as the tax-free Direct ISA and Junior ISAs.

The new rates are:

Whilst a decent improvement, especially given that the base rate has remained at 3.75% since December last year, these rates can be easily beaten elsewhere, with plenty of easy access accounts and easy access cash ISAs paying over 4%, and the top JISA with the Leek Building Society is paying 3.75%.

Take a look at our Best Buy tables to find the top rates currently available.

Savings rates have remained buoyant recently as there is a real likelihood that the Bank of England will need to raise interest rates in the near future, to try and control inflation.

Premium Bond boost

In addition to these rate hikes, from the July 2026 Premium Bonds draw, the prize fund rate will rise from 3.30% to 3.80% tax-free, while the odds of winning will improve from 23,000 to 1 to 22,000 to 1 for every £1 Bond held.

The changes reverse the reductions introduced in August last year and April 2026, bringing the prize fund rate back to the level it was a year ago. And it will be welcomed by the more than 22 million Premium Bonds holders across the UK.

More prizes every month

The increase in the prize fund rate means that NS&I expects to pay out around 322,000 extra prizes each month compared to the May 2026 draw.

In total, the July 2026 draw is expected to pay out around £436.8 million in prize money, up from £376.2 million in May.

There will still be two £1 million jackpot winners every month, and the number of higher-value prizes will increase. NS&I estimates there will be:

• 12 additional £100,000 prizes
• 24 more £50,000 prizes
• 49 extra £25,000 prizes

The number of £100 and £50 prizes will also rise sharply, helping to spread more winnings across a larger number of bondholders.

What are Premium Bonds?

Premium Bonds remain one of the UK’s most popular savings products. But, rather than paying interest in the traditional way, each £1 Bond is entered into a monthly prize draw where savers can win tax-free prizes ranging from £25 to £1 million.

Up to £50,000 per person can be held in Premium Bonds, including for children under 16, and you can have access to the funds should you wish.

For many savers, the appeal is the combination of complete security but mainly the ‘what-if’ factor. The excitement that, however unlikely it is, as well as one of the smaller prizes you might just be one of the lucky few to win one of the big ones!

However, unlike a traditional savings account, the risk is that you may win nothing at all – and many bondholders will earn less than the headline prize fund rate.

Although on the face of it, the rate of 3.80% looks less competitive as you can easily earn more than 4% on an easy access account elsewhere, if you pay tax on your savings interest, you’d be hard pressed to find an equivalent savings account paying as much.  

For example, if you were to win the equivalent of the new prize fund interest rate of 3.8% tax free, as a basic rate taxpayer this rate is the equivalent of earning 4.75% on a taxable easy access account, 6.33% if you are a higher rate taxpayer and 6.91% for additional rate taxpayers!

So, even though savings rates remaining competitive and inflation is still a concern for many households, the higher prize fund rate and improved odds are likely to reinforce Premium Bonds’ popularity – especially for taxpayers.  

As always though, savers should review their wider cash savings strategy regularly to ensure their money is working as hard as possible.

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Please note: This article is intended for general information only and does not constitute individual financial advice.

The Financial Conduct Authority (FCA) does not regulate cash or tax advice.