National Savings and Investments (NS&I) has confirmed a Premium Bonds prize fund rate hike, as well as an interest rate increase across its line of savings accounts.
The UK Government-backed financial institution has taken action amid a volatile time for the economy as savers seek to secure the best returns for their money.
The most recent hike to the prize fund rate from Premium Bonds will come into effect from July's draw, resulting in the odds shortening to 22,000 to one from 23,000 to one.
This move is expected to see 322,000 extra prizes created for that month's Premium Bonds lottery draw, with the prize pot increasing by over £60million.
Full list of NS&I changes here
|GETTY / NS&I
As NS&I's signature product, Premium Bonds has become increasingly popular over the years thanks to its jackpot prize, which sees two lucky individuals take home £1million.
Smaller cash prizes are available in the monthly lottery, from larger amounts of £100,000 and £50,000, to smaller sums of £100 and £50.
However, for July, the financial institution has confirmed there will likely 12 additional £100,000 prizes, 24 more £50,000 prizes and an extra 49 £25,000 prizes.
Andrew Westhead, NS&I Retail Director, said: "We regularly review our products to ensure they reflect current market conditions, and we're pleased to be able to improve rates across five variable savings accounts today."
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NS&I has reduced the interest rate it now offers on its Green Savings Bonds as it launched a new Issue | NS&I;He added: "This reflects changes in the wider savings market and helps ensure we meet our Net Financing target. Premium Bonds offer the monthly excitement of tax-free prizes with 100 per ecnt security backed by HM Treasury, and the flexibility to withdraw at any time.
"So, I'm pleased that from July we can improve both the prize fund rate and the odds meaning even more chances to win for our 22 million Premium Bonds holders."
Here is a full list of the new rates to Premium Bonds and other savings accounts offered by NS&I:
- Premium Bonds prize fund rate - 3.80 per cent.
- Direct Saver - 3.45 per cent gross/annualised equivalent rate (AER)
- Income Bonds 3.40 per cent gross/3.45 per cent AER
- Direct ISA - 3.80 per cent gross/AER tax-free
- Junior ISA - 3.70 per cent gross/AER tax-free.
Premium bond prizes paid to accounts where the holder has been dead for more than a year are kept by NS&I | GETTYSarah Coles, head of personal finance at AJ Bell, said: "It was starting to get a bit embarrassing for NS&I to have fallen quite so far behind the more competitive accounts in the easy access market.
"Cuts in April meant Premium Bonds were paying a prize rate of just 3.3 per cent, where easy access savers can get their hands on more than ten accounts without restrictions on withdrawals paying over four per cent, according to data from Moneyfacts.
"The rise in the prize rate, and the increases to its other easy access products is NS&I playing catch up with the wider market. It did the same with its fixed rate accounts at the end of April and has finally bitten the bullet with its easy access products today.
"NS&I has a duty to offer decent value for savers, and has a fairly stretching fundraising target of £15 billion this financial year, so it needs to work harder to win savers over."