NS&I raises Premium Bonds’ prize rate to 2.2%
27th September 2022 13:25
by Myron Jobson from interactive investor
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Lottery-style alternative to easy access savings account could tempt savers - but investment could be a better bet in the long term.
Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “Premium Bonds customers now have a chance to win a further £76 million of tax-free cash prizes from next month. The projected prize rate has been pushed up from 1.4% to 2.2% - but that does not mean the average person will get the heightened rate on their savings. Even though the odds of winning a prize have improved a smidge, the fact remains that while some savers might be lucky enough to hit the jackpot or win big early on, others may save and wait for long periods for even a small return.
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“The value of cash held in savings is eroded by inflation which hit 9.9% in August, but you should still make your money work harder for you where you can.”
“Premium Bonds can be fun lottery-style alternatives to easy access savings accounts. The potential of winning, and receiving prizes equivalent to a savings rate of 2.2%, which holds up against most easy access savings accounts, might tempt some savers hoping for good luck to bolster their wealth amid the largest fall in living standards in generations.
“If you’re planning on putting money aside for five years or more, a good option worth considering is the stock market. While it fluctuates on a day-to-day basis, when smoothed over time, a well-diversified portfolio can offer sensible way to help beat inflation. Premium bonds can have a place as part of a well-diversified portfolio.”
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