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Premium Bonds customers have been warned they could be losing money in real terms by holding onto their Bonds.
Savers may be wondering if the scheme is right for them as NS&I is to cut the prize fund rate again from the August draw.
The rate is falling from the current 3.8% down to 3.6%, following rate cuts in April, in January and in December last year. The odds of each £1 Bond winning a prize will remain the same at the current 22,000 to one.
With another rate cut looming, Sarah Coles, head of personal finances at Hargreaves Lansdown, has warned that the average Bond holder could already be losing out.
She explained: “In an average month, the average Bond holder will win nothing. It means your savings are likely to lose money after inflation.”
This is because if you don’t win any prizes, the value of your holdings simply remains the same, meaning you are losing value in real terms as the cost of living rises.
Ms Coles urged people to be aware of this trend: “Over time it will eat into the value of your savings, and if you hold them for a considerable period, you could be shocked at the damage it can do to your spending power.
“Some people are happy with this trade-off, but others prefer the certainty of a strong rate in the wider savings market. Check what’s available from online banks and saving platforms, where you’ll usually find much better deals than from the high street giants.”
The finance expert also encouraged customers to check if they have any unclaimed prizes. NS&I revealed in its recent annual report that the number of unclaimed prizes increased from £31billion in 2023-2024 to £32billion in 2024-2025.
Ms Coles said: “If you have your numbers, you can check them on the NS&I website. Otherwise, you can use NS&I’s tracing service, or the My Lost Account process.
“In the previous tax year, the business found more than 54,000 accounts, holding over £172 million. It means you could already be sitting on a big win.”
There was some hope NS&I may want to retain the prize fund rate as the net financing target for NS&I for the current financial year is £12billion, an increase of a third compared to last year.
Another good sign for the future of Premium Bonds is that in 2024-2025, it was £650million cheaper for the Government to raise funds through NS&I products than through the sale of gilts, where the Government issues bonds.
This may encourage NS&I bosses to try and keep their products such as Premium Bonds as competitive as possible.
You can hold up to £50,000 in Premium Bonds. Many savers arrange their accounts so when they win a prize, the funds are automatically reinvested in buying more Bonds.
