Senior News & Investigations Reporter
24 February 2026
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NS&I will cut its Premium Bond prize-fund rate to 3.3% (from 3.6%) for the April draw and beyond. This rate already lagged behind interest rates on standard savings, but many still keep their cash in these bonds. In light of this latest cut, we analyse whether Premium Bonds are still worth it, and if so, who for.
The odds of any single bond winning a prize, which have been the same since December 2024, are also dropping slightly, from 1 in 22,000 to 1 in 23,000.
This latest cut follows a series of reductions last year, which took the prize-fund rate from 4% in January to 3.6% by August.
It’s important to bear in mind that most people with typical luck won’t get a return of 3.6% (or 3.3%), even with the maximum £50,000 invested. The reason behind this is quite complex – see below for our brief breakdown, or check out our Premium Bonds guide for a full explanation.
The rate cut makes Premium Bonds even easier to beat elsewhere
For most savers with average luck, accounts that pay interest will now be even more likely to beat Premium Bonds. This is because savings interest is a guaranteed return – so if you get today’s top easy-access rate of 4.5%, you’d get £45 in interest a year for every £1,000 saved.
Though this interest rate can go up and down over time, you know exactly what you’ll earn at any given point – so it still provides more certainty than Premium Bonds, where many saving the same £1,000 would win nothing.
Many people often think: “I’m likely to get the prize rate (or thereabouts) – and there’s a small chance of winning a million”, but this isn’t correct. You’re actually likely to get quite a lot less than the headline prize rate (3.6% or 3.3%), and there’s a negligible chance of winning a million.
If you know and accept this, then investing in Premium Bonds isn’t a bad plan. Otherwise, see our regularly updated Top savings guide for the latest deals.
Premium Bond prizes are tax-free – though cash ISAs will likely win for most
With normal savings, while interest is paid tax-free, it is taxable as income. However, each tax year you get a personal savings allowance (PSA) that means:
Basic 20% rate taxpayers don’t pay tax on the first £1,000 a year of interest.
Higher 40% rate taxpayers don’t pay tax on the first £500 a year of interest.
Top 45% rate taxpayers pay tax on all interest.
With today’s top standard (non-ISA) easy-access rate of 4.5%, it takes just over £22,222 in savings for basic-rate taxpayers to exceed the allowance and start paying tax on the interest (and just over £11,111 for higher-rate taxpayers).
Premium Bond prizes aren’t taxed, which means that if you’ve larger savings in cash, and have maxed out your £20,000 a year ISA allowance and earn enough interest to exceed your PSA, Premium Bonds are probably a decent choice… if you can accept the random nature of the ‘interest’.
For everyone else, cash ISAs – savings accounts you never pay tax on – are still likely to be the better choice. The top easy-access cash ISA rate is currently 4.4% – slightly lower than the standard non-ISA rate, but tax-free and offering a guaranteed return that’s higher than the current Premium Bond prize rate of 3.6% (which you need to be lucky to get).
A brief breakdown of the complex maths behind Premium Bonds
Premium Bonds are essentially a savings account you can put money into, where instead of being paid interest, tax-free prizes are awarded in a monthly draw. Prizes range from £25 to £1 million.
The nearest thing Premium Bonds have to an interest rate is their annual prize-fund rate – this is what’s decreasing from 3.6% to 3.3% in April. It’s a benchmark of the “average” return you’ll get for your money – though in reality, there’s no guarantee you’ll win anything at all.
What it really means is that for every £100 invested in Premium Bonds, £3.60 (soon to be £3.30 from April) is paid out every year in prizes. But although the prizes include two £1 million payouts and other big prizes, many win far less.
Below is a breakdown of how the number of prizes awarded is estimated to change from April 2026:
Premium Bond prize breakdown
Value of prizes
Number of prizes in February 2026
Number of prizes in April 2026 (estimated)
£1,000,000
2
2
£100,000
78
71
£50,000
154
143
£25,000
311
284
£10,000
777
712
£5,000
1,553
1,424
£1,000
16,322
15,035
£500
48,966
45,105
£100
1,735,948
1,537,125
£50
1,735,948
1,537,125
£25
2,643,007
2,806,003
Total:
6,183,066 prizes
5,943,029 prizes