NS&I Premium Bonds customers with ‘modest’ holdings urged to close accounts

NS&I account holders warned

Premium Bonds savers with “modest” savings have been warned to move their cash amid the plunging rate. Moneyfactscompare’s finance expert Rachel Springall said those with modest holdings “may never win a penny”.

Ms Springall has spoken out ahead of the prize rate plunging, saying savers with National Savings and Investments (NS&I) accounts and Premium Bonds “could make their money work harder for them” with alternative savings vehicles.

She explained: “Savers might then feel more inclined to top up the pot regularly towards a specific goal, whereas a Premium Bond could just be forgotten about over time.”

READ MORE UK courier firm collapses – households face waiting ‘weeks’ for parcels

Ms Springall added: “The savings sentiment for consumers can change over time, particularly during times of uncertainty.”

NS&I will cut its Premium Bond prize-fund rate to 3.3% (from 3.6%) for the April draw and beyond. This rate already lagged behind interest rates on standard savings, Money Saving Expert warned.

Andrew Westhead, NS&I’s retail director, said the changes “reflects changes in the wider savings market, and ensures we continue to balance the interest of savers, taxpayers and the wider financial services sector.”

Analysts note that this means someone holding £10,000 in Premium Bonds will see average prize payouts drop from £360 to just £330, in practical terms.

MSE, the site founded by BBC and ITV star Martin Lewis, said: “For most savers with average luck, accounts that pay interest will now be even more likely to beat Premium Bonds.

“This is because savings interest is a guaranteed return – so if you get today’s top easy-access rate of 4.5%, you’d get £45 in interest a year for every £1,000 saved.

“Though this interest rate can go up and down over time, you know exactly what you’ll earn at any given point – so it still provides more certainty than Premium Bonds, where many saving the same £1,000 would win nothing.”