Savers are 9% more likely to win a prize on the Premium Bonds in August following the prize rate increase, analysis by OAC has shown.
According to the actuarial consultancy, part of the Broadstone Group, the odds of winning a prize in August will increase by 9% with the odds falling from 24,000 -1 to 22,000-1 compared to July, after the prize fund rate increases to 4% from next month – the highest in over a decade.
While a saver with £1,000 in Premium Bonds is still likely to win nothing, someone with £50,000 in savings and average luck now stands to return 3.45% in August, compared to 3.2% in July. This would work out as an extra £125 through the year in prize winnings from £1,600 to £1,725.
Similarly, a median saver with £25,000 in Premium Bonds in August would have a median return of 3.4% which works out at an average annual return of £850. This compares favourably to July where a median saver was likely to see 3.1% returns equalling just £775 over a 12-month period.
Greig Bingham, head of financial modelling at OAC, said: “The increase to the prize rate means that savers now stand a far better chance of winning in the Premium Bonds.
“While it is difficult to quantify what the prize money will translate into for a regular Premium Bond saver, by using this financial modelling we are able to work out the annual returns for a saver with average luck.
“While the median return lags behind many cash savings accounts which have upped their rates in the wake up of rising interest rates, the slim possibility of scooping a life- changing sum may be enough to attract more savers to Premium Bonds.”
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