National Savings & Investments (NS&I) announced on Tuesday that the prize rate for its Premium Bonds will jump to 3.8% for the July draw,up from 3.3% last month. The higher rate translates into roughly 322,000 additional prizes and pushes the bond’s effective return above the Bank of England’s base rate for the first time in almost four years.

322,000 Extra Prizes Redefine the July Draw

According to the NS&I announcement, the July draw will feature 12 extra £100,000 prizes, 24 more £50,000 prizes and 49 additional £25,000 prizes. The total number of £50,000 and £100,000 awwards will each increase by more than 400,000, dramatically boosting the odds of a substantial win.

The odds per £1 bond improve from 1 in 23,000 to 1 in 22,000, meaning every £100 of bonds now yields one entry, up from the previous 1 in 23,000 ratio. This shift is designed to attract savers seeking the tax‑free thrill of the monthly draw.

Premium Bonds Beat Bank of England Base Rate for First Time Since 2020

NS&I’s new 3.8% prize rate now exceeds the Bank of England’s current base rate, a milestone not seen in nearly four years. As the report notes, this makes Premium Bonds one of the few savings products offering a return that outstrips the nation’s benchmark interest.

The move positions NS&I against competitors like Santander’s First Home Saver account, which offers 4% interest but ties prize eligibility to monthly deposits of at least £100. While Santander’s product provides guaranteed interest, it lacks the tax‑free jackpot potential that Premium Bonds promote.

How Competing Savings Products Stack Up

Other providers are also courting prize‑seeking savers. Kent Reliance offers a £1,000 monthly prize for account holders with a £100 balance, and Revolut recently launched a weekly savings challenge that feeds into a £10,000 monthly draw and a £100,000 annual jackpot.

These alternatives typically combine modest interest rates—Revolut’s account pays 3%—with prize draws that lack the tax‑free status of NS&I’s offerings. As a result, Premium Bonds retain a unique appeal for those willing to trade guaranteed interest for the chance of a large, tax‑free windfall.

Who Benefits and What Remains Unclear?

The primary beneficiaries are existing Premium Bonds holders, who will see their odds improve without any additional investment. New savers may also be drawn in by the heightened publicity around the rate hike.

However, the announcement leaves several specifics unanswered: the exact total prize fund for July, how the increased prize pool will be fundeed, and whether NS&I plans to sustain the 3.8% rate beyond this draw. As the report states, “the increase puts the Premium Bond rate above the Bank of England’s base rate for the first time in nearly four years,” but it does not detail the long‑term strategy.