UK savers are bracing for another shake-up in the country’s most popular savings product, as National Savings and Investments (NS&I) announced a significant reduction to Premium Bonds returns and prize odds starting with the April 2026 draw. The move, revealed on February 24, 2026, will see both the prize fund rate and the likelihood of winning a prize decrease, sparking new debate over whether Premium Bonds remain a worthwhile place to stash your cash.
Beginning in April, the Premium Bonds prize fund rate will fall from 3.6% to 3.3%, according to NS&I. This figure, while not a traditional interest rate, is meant to represent the average annual return for a bondholder with average luck. Unlike conventional savings accounts, Premium Bonds don’t pay interest; instead, each £1 bond is entered into a monthly draw for tax-free prizes ranging from £25 up to a life-changing £1 million.
But it’s not just the rate that’s taking a hit. The odds of winning any prize will also lengthen—from 22,000 to 1, to 23,000 to 1 for each £1 bond. That means the typical saver will have to wait even longer between wins, and those wins may be smaller on average. The odds had previously been set at 22,000 to 1 since December 2024, and this marks the latest in a series of cuts: since September 2023, the prize fund rate has been slashed six times, down from a recent high of 4.65%.
As a direct result of these changes, the total money distributed among Premium Bonds winners in April 2026 is expected to fall to around £375 million, down from approximately £408 million in the February 2026 draw. The number of prizes on offer will also shrink, from 6,183,066 in February to an estimated 5,943,029 in April, according to NS&I’s own projections.
Interestingly, while most prize categories will see fewer winners, the number of £25 prizes will actually increase—from 2,643,007 to an estimated 2,806,003. The number of top £1 million prizes will remain unchanged at two per month, but higher-value awards are on the decline: £100,000 prizes are set to drop from 78 to 71, £50,000 prizes from 154 to 143, and £25,000 prizes from 311 to 284. Even more modest prizes like £5,000 and £1,000 will see reductions, with £5,000 prizes falling from 1,553 to 1,424 and £1,000 prizes from 16,322 to 15,035.
Andrew Westhead, retail director at NS&I, framed the decision as a necessary adjustment to reflect the broader financial landscape. “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,” Westhead said in a statement quoted by multiple outlets including MoneyWeek and The Guardian.
Premium Bonds have long been a staple for British savers, offering the thrill of a potential windfall with the reassurance of government backing and tax-free winnings. Since their launch in November 1956, Premium Bonds have awarded over £40 billion in prizes, and they remain the UK’s most popular savings account. In 2025 alone, NS&I paid out over £4.95 billion across 71.7 million prizes, with December 2025 seeing more than 6.1 million prizes worth £403.8 million handed out. The iconic ERNIE machine (Electronic Random Number Indicator Equipment) continues to draw the winning numbers each month, adding a dash of lottery-like excitement to the savings market.
Yet, for many, that excitement may be wearing thin. A Freedom of Information request sent to NS&I by AJ Bell in April 2025 revealed a stark statistic: around 63% of Premium Bonds holders have never won a single penny from the monthly prize draws. The average holding for these non-winners is just £106.79, while those who have won have an average balance of £23,397. This skew highlights a core reality—while every £1 bond has an equal chance of winning, those with more bonds simply have more entries and, therefore, more chances to win.
For savers weighing their options, the numbers paint a sobering picture. As Mark Hicks, director of active savings at Hargreaves Lansdown, told MoneyWeek: “The prize fund rate cut serves as a timely reminder as to whether you can get more for your money elsewhere. Premium Bonds don’t pay out interest – their prize rate is more of a benchmark of average return for your money. However, the reality is that, if you don’t win anything, you don’t get anything at all. It’s well worth looking at the wider savings market to see what deals are available.”
Indeed, the wider savings market is now offering more attractive and predictable returns. Top cash ISAs, for example, are currently paying up to 4.32% interest—higher than the new Premium Bonds prize fund rate. Money saved in an ISA grows free from tax, just like Premium Bonds winnings. For most people who haven’t used up their annual ISA allowance (currently £20,000), a cash ISA is likely to provide a better, more reliable return.
However, Premium Bonds aren’t without their niche appeal. Their tax-free status can be particularly attractive for those who’ve maxed out their ISA allowance and still have significant funds to invest. Higher-rate taxpayers, who can only earn £500 in savings interest tax-free each year, may also find Premium Bonds useful for sheltering large sums from the taxman. Individuals—including children under 16—can hold up to £50,000 in Premium Bonds, and new purchases must be held for a full calendar month before becoming eligible for the prize draw.
Despite these benefits, experts caution that Premium Bonds are becoming less competitive. As The Times noted, easy access savings accounts and regular saver accounts can offer rates as high as 4.5% or even more for smaller balances. Some regular saver accounts from providers like Principality, Zopa, or first direct are offering upwards of 7%—though often with restrictions on how much can be deposited each month.
Still, there’s no denying the enduring popularity of Premium Bonds, even as their returns falter. For some, the chance to win big—and the government guarantee—will always be worth the trade-off. For others, especially those with modest balances or a preference for certainty, the time may be right to look elsewhere.
With the April changes looming, UK savers face a familiar dilemma: stick with the dream of a tax-free windfall, or seek out more predictable—and potentially more generous—returns in an increasingly competitive savings market.