National Savings & Investments has cut the Premium Bonds prize fund rate from 4.15% to 3.85%, effective from the August 2026 draw, lengthening the odds of any individual £1 bond winning a prize from 21,000 to one to roughly 24,000 to one. Confirmed on 29 July, the change applies to the roughly 24 million people who hold Premium Bonds across the UK. According to NS&I, the adjustment reflects the need to balance the interests of savers against its funding remit for HM Treasury.
The cut is NS&I's third to the Premium Bonds rate in 2026, following reductions in February and May, and it tracks the broader direction of the Bank of England base rate, which has fallen from 4.75% to 4% since late 2024. Rather than paying interest directly, NS&I enters eligible Premium Bonds into a monthly draw run using ERNIE, the organisation's random number generator, offering two prizes of £1 million and a minimum win of £25 each month.
What actually changes for bondholders
The headline prize fund rate is a notional average rather than a guaranteed return, and the lengthened odds mean fewer mid-value prizes will be paid out each month even though the top prizes stay unchanged. Based on NS&I's published odds calculator, a saver holding the maximum £50,000 in Premium Bonds can now expect around eight prizes a year on average, down from nine under the previous rate. Actual results vary considerably bond by bond, since each £1 unit has an equal, independent chance in every draw.
NS&I has also trimmed rates on several other products from the same date, including Direct Saver, which drops from 3.5% to 3.25%, and Income Bonds, down from 3.44% to 3.2%. For both products, the new rates apply automatically to existing and new customers alike, with no action required.
How Premium Bonds compare with easy-access accounts
The revised rate puts Premium Bonds behind the top easy-access savings deals tracked by Moneyfacts, several of which still pay above 4% before tax, though Premium Bond winnings remain entirely tax-free regardless of a saver's income tax band. Higher and additional-rate taxpayers feel that gap most, since they lose a larger share of ordinary savings interest once they exceed their Personal Savings Allowance. For basic-rate taxpayers with modest balances, though, a standard easy-access account or cash ISA may now edge out Premium Bonds on likely return, even after accounting for the tax-free status.
NS&I's own net financing target for the current financial year — the amount it must raise on behalf of the Treasury relative to other government borrowing routes — is one of the levers behind how aggressively it prices Premium Bonds against high street competitors. When that target is low, NS&I has less need to offer market-leading rates to attract deposits, and cuts tend to follow.
The next scheduled review of NS&I's savings rates, including Premium Bonds, is due in September, alongside the Bank of England's next Monetary Policy Committee decision on 17 September 2026.