National Savings and Investments (NS&I) has confirmed the prize fund rate attached to Premium Bonds will increase to 3.80 per cent from July's prize draw.
Unlike traditional savings accounts, Premium Bonds do not accrue interest over a period of time with savers instead being enrolled in a monthly cash lottery.
As such, the prize fund rate is the closest thing to a savings rate, having been cut from 3.6 per cent to 3.3 per cent in last month's Premium Bonds draw.
Furthermore, NS&I announced the odds of someone winning a Premium Bond prize will return to 22,000 to one, after being 23,000 to one.
NS&I has confirmed a change to Premium Bonds
| NS&I / GETTYAccording to NS&I, there will be an estimated 322,000 extra prizes in July compared to this month's draw, with the overall prize pot jumping to over £60million.
Every month, two lucky individuals take home the jackpot £1million from NS&I, but the majority of bondholders win smaller sums the longer they invest.
Next month, there is expected to be 12 additional £100,000 prizes, 24 more £50,000 prizes, and an extra 49 £25,000 prizes.
In terms of smaller cash prizes, July's draw is expected 2.8 million more £25 cash prizes handed out to Premium Bond holders.
People using the NS&I; prize checker app will need to have their NS&I; number or holder's number | NS&I;LATEST DEVELOPMENTS
British savers are looking for the best deal | GETTYAndrew 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.
"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% 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."
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How have Premium Bonds compared to the Ftse 100? | LIGHTYEAR Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: "Savers who prefer to keep their pots with NS&I will be delighted to see rates increase, but it is worth noting that the top rates on the market are over four per cent on easy access accounts, with some top fixed accounts paying well over 4.50 per cent.
"However, there is no denying that some savers will forgo higher rates to have their money placed with the brand, as it is 100% backed by HM Treasury.
"This move from NS&I comes at a time where there are expectations for interest to stay higher for longer, so it is important that it remains in a somewhat middle ground space to offer a fair rate, but not lead the market outright.
"Genuinely, interest rates on savings accounts have been increasing, so now is an ideal time to check the latest deals on the market and review any old pots."