NS&I will reduce the Premium Bond rate from 4.15% to 4% in January, while also cutting the rates on other savings accounts. Are Premium Bonds still worth it?

From Friday, December 20, 2024, interest on the National Savings and Investments (NS&I) direct saver account will fall from 3.75 pre cent to 3.50 per cent, while those holding NS&I income bonds will see their interest rate dip from 3.75 oer cent to 3.49 per cent AER.

Effective Rate Of Return Drops To 4.00% In 2025 National Savings and Investments (NS&I), the government-backed savings bank, is pulling

The NS&I website states: "Premium Bonds don’t earn interest. Instead, there’s an annual prize fund rate that funds a monthly prize draw for tax-free prizes. Remember that inflation can reduce the true value of your money over time.

The number of each prize amount will drop apart from the number of smallest prizes, worth £25, which will increase by about 300,000, which will actually mean there will be more prizes in January, as the number of prizes can fluctuate. This is how many prizes there will be in January, compared to December:

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NS&I has confirmed the Premium Bonds prize fund rate will be reduced from 4.15% to 4.00% from its January 2025 draw - here is everything you need to know

Premium Bonds holders are being hit by another drop in the prize fund rate from January as the number of big cash prizes will fall. The prize fund rate is already on the decline dropping in the December draw from 4.4 percent to 4.15 percent, and will now see a further decrease in January to 4 percent.