Synopsis: The maximum investment in premiums bonds is increasing to £40,000 on 1 June and the number of £1m prizes will double in August. 

Date posted: Wednesday, May 28, 2014

Last March’s Budget gave a fillip to National Savings & Investments, with increased (N)ISA limits, the promise of ‘market leading’ savings bonds for pensioners (ie those most likely to vote) and several improvements to Premium Bonds.

The first of the tweaks to Premium Bonds takes effect at the beginning of June, with an increase in the maximum investment from £30,000 to £40,000. From August there will be two £1m prizes instead of the current one and in 2015/16 the investment limit will increase by another £10,000 to £50,000.

What is not changing is the interest rate for the prize money, which remains at the 1.3% set in August 2013. This would suggest that when the second monthly £1m draw is added in August, the number of other prizes will fall. However, the change will be barely noticeable, as the total monthly pay out is now running at £51.6m. Those tempted to add another £10,000 to their holding might like to contemplate the pattern of May’s prize distribution, detailed below.


Premium Bonds with a 1.3% prize rate look reasonably attractive in a world of 0.5% base rates and beats the taxable 1.26% (AER) on offer from NS&I’s income bonds. However, with average luck Premium Bonds are still paying a rate below inflation, whichever yardstick you choose.

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