As such, the NS&I is “lengthening” the odds of winning for each £1 bond from 22,000 to 1 to 23,000 to 1 in a blow to millions of Premium Bond holders going forward.

Andrew Westhead, NS&I’s retail director, stated: “This change to the Premium Bonds prize fund rate and odds reflects changes in the wider savings market, and ensures we continue to balance the interests of savers, taxpayers and the wider financial services sector.”

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The adjustment follows a previous rate change in August 2025, while odds were last modified in December 2024.

Unlike traditional savings products, Premium Bond customers do not accrue interest in a normal way and are instead enrolled in a monthly cash prize lottery.

Every month, winners can secure sums of cash to bolster their savings, with two lucky individuals taking home £1million.

Alastair Douglas, the chief executive of TotallyMoney, said the announcement was unsurprising given anticipated monetary policy shifts.

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Mr Douglas explained: “The news that NS&I is reducing the prize fund rate and lengthening the odds for Premium Bonds doesn’t come as a surprise with the Bank of England expected to cut interest rates, and mirrors what we’re seeing in the wider savings market.”

He cautioned that whilst the headline 3.30 per cent rate appears appealing, it offers no certainty of returns since the figure represents the total prize pool rather than individual payouts.

The savings expert described Premium Bonds as essentially a lottery, albeit one where savers cannot lose their original stake, unlike those who choose to invest.

“One month you might earn nothing, and the next you could land a jackpot,” Mr Douglas added, adding that with odds of 1 in 23,000, substantial sums must be invested to generate regular prizes.

However, he highlighted the tax-free status as a significant advantage for those in higher tax brackets. Mr Douglas illustrated this point with a calculation: someone holding the maximum £50,000 allowance who won the equivalent of 3.30 per cent would receive £1,650 entirely free of tax.

By contrast, a higher-rate taxpayer earning identical returns through a standard savings account could face a tax liability of £743. For those seeking certainty over their returns, Douglas advised exploring the broader savings market.

Mr Douglas shared: “If you want a guaranteed return, then shop around for a decent savings account – some are offering more than four per cent with easy-access.”

He also encouraged savers to look beyond traditional high street banks, noting that smaller providers often offer more competitive rates. Mr Douglas pointed out that the Financial Services Compensation Scheme (FSCC) protects deposits up to £120,000.