Premium Bond Wins Slashed From December

National Savings & Investments (NS&I) has announced that the Premium Bonds prize fund rate is to be cut from 1.40% to 1.00% from the December 2020 draw, meaning far fewer prizes will be available and the odds of any £1 bond winning will lengthen from 24,500/1 to 34,500/1.

The news comes on the heels of the announcement last week that, from March 2021, prizes will only be paid direct to winners’ bank accounts. Paper payments, made via ‘warrants’ (essentially cheques) sent through the post, are being phased out from December onwards.

NS&I is also cutting interest rates on a swathe of its variable and fixed rate products from 24 November 2020 because these have become market leading, and consequently attracted huge demand, as other providers have cut their rates.

Satisfying such high demand is not sustainable because interest on NS&I products comes from the public purse.

NS&I says it has to ‘strike a balance between the interests of savers, taxpayers and the broader financial services sector’, adding that the changes will ‘ensure NS&I’s interest rates are aligned appropriately against those of competitors’.

The number of Premium Bond prizes in September was 3,856,040. In December, it is estimated that this number will shrink to 2,850,256. The number of winning draws of the most common £25 prize will fall from 3,786,474 to 2,790,269 (estimated).

There will still be two £1m prizes each month, but the number of £100,000 prizes will fall from 7 to 4, while there will be 9 £50,000 prizes instead of the current 14.

The number of other prize values won each month will also reduce.

Payments direct to bank

With the phasing out of winners’ cheques through the post, winners who have yet to provide NS&I with their bank account details will instead receive a letter telling them how to arrange for direct payments to their bank.

NS&I says paying prizes directly into bondholders’ bank accounts is quicker, easier and more secure than using Royal Mail. It also cites the environmental benefits of moving away from paper communications.

Over a quarter of Premium Bond prizes are currently paid with a ‘warrant’ sent through the post. Bondholders who receive prizes this way will need to give NS&I their bank details to receive their prizes. Customers will in future be notified of any prize win via their choice of email or text message.

An estimated 22 million people have Premium Bond holdings, meaning up to six million people currently receive their prizes through the post.

You can give NS&I your bank details (along with an email address and mobile phone number for notification purposes) once you have registered on its website.

Customers without internet access can call NS&I on 08085 007 007 to provide NS&I with their bank details and discuss their options.

Did you see that? 007 in the phone number? Bond – James Bond? Clever!

‘Don’t give details over the phone’

NS&I stresses that it will never call customers to ask for their bank details, so if you receive a call purporting to be from them saying you need to provide your details in order to get your prize, it will be a scam and you should hang up immediately.

In addition to receiving a prize payment, bondholders can also reinvest their winnings into more Premium Bonds, up to the maximum holding of £50,000.

NS&I started paying prizes directly into UK bank accounts in 2011. In the September 2020 prize draw, almost three quarters (74%) of the 3,856,040 prizes were paid this way or reinvested into more bonds.

There are currently more than 1.8 million unclaimed Premium Bonds prizes, worth over £67 million. NS&I says payment by BACS will help prevent prizes from going unclaimed.

You can check whether you have an unclaimed prize by using the online prize checker on the NS&I website. There is also a prize checker app.

Premium Bonds are valued at £1 each and the minimum holding is £25 (maximum £50,000). Prizes are drawn monthly and range from £25 to £1 million, paid free of tax.