January boost for Premium Bonds holders and savers of all ages as NS&I increases interest rates

More than 870,000 customers holding NS&I’s Direct Saver, Income Bonds and Direct ISA are set to benefit from today as NS&I increases interest rates across all three accounts. The interest rate paid on Direct Saver and Income Bonds will increase from 2.30% to 2.60%, whilst the interest rate on Direct ISA will increase from 1.75% tax-free to 2.15% tax-free.

The Premium Bonds prize fund rate will also increase from 3.00% to 3.15%, effective from the February 2023 prize draw. This follows the rate increasing from 2.20% to 3.00% on 1 January 2023.

NS&I has also increased the interest rate that it pays on its Junior ISA from 2.70% tax-free to 3.40% tax-free, meaning that 80,000 under 18s will benefit from extra interest on their savings.

Today’s changes mean that Income Bonds are now paying their highest rate of interest since 2008, whilst the interest rate on Direct ISA is the highest it has been since 2013. The interest rate paid on NS&I’s Direct Saver is now the highest it has been since the account launched in March 2010.

The change to the Premium Bonds prize fund rate is the fourth upwards change that NS&I has made in the last year, meaning that the prize fund rate is at its highest level in over 14 years.

The odds of each £1 Bond winning a prize will remain fixed at 24,000 to 1, with the changes meaning that the number of prizes worth £50 to £100,000 will increase from next month’s draw.

These changes will ensure that NS&I’s savings products are competitive when compared to the broader savings market. The changes also ensure that NS&I continues to balance the interests of savers, taxpayers and the broader financial services sector.

NS&I Chief Executive, Ian Ackerley, said : “Today’s changes will provide a welcome boost for savers of all ages across the country, with more Premium Bonds prizes and some of the highest interest rates we’ve seen in over a decade.

“In a fast changing savings market, we’re committed to making sure our products remain competitive and our customers get a good return on their savings. Today’s changes ensure that we continue to balance the needs of savers, taxpayers and the broader financial services sector.”

Current and new Premium Bonds prize fund rate and odds

Current prize fund rate

Current odds

New prize fund rate (from February 2023)

Odds from February 2023 (no change)

3.00% tax-free

24,000 to 1

3.15% tax-free

24,000 to 1

Number and value of Premium Bonds prizes

Value of prizes in January 2023

Number of prizes in January 2023

Value of prizes in February 2023 (estimated)

Number of prizes in February 2023 (estimated)

£1,000,000

2

£1,000,000

2

£100,000

56

£100,000

59

£50,000

111

£50,000

117

£25,000

224

£25,000

236

£10,000

559

£10,000

590

£5,000

1,116

£5,000

1,177

£1,000

11,968

£1,000

12,573

£500

35,904

£500

37,719

£100

1,159,432

£100

1,280,509

£50

1,159,432

£50

1,280,509

£25

2,617,902

£25

2,376,161

Total

£299,202,350

Total

4,986,706

Total

£314,347,875

Total

4,989,652

Variable rate savings products

Product

Previous interest rate

Interest rate from today (24 January 2023)

Direct Saver

2.30% gross/AER

2.60% gross/AER

Income Bonds

2.30% gross/2.32% AER

2.60% gross/2.63% AER

Direct ISA

1.75% tax-free/AER

2.15% tax-free/AER

Junior ISA

2.70% tax-free/AER

3.40% tax-free/AER

–Ends–

Notes to editors

  1. NS&I is one of the largest savings organisations in the UK, offering a range of savings and investments to 25 million customers. All products offer 100% capital security as NS&I is backed by HM Treasury.
  1. NS&I announced on 13 December that the Premium Bonds prize fund rate would increase from 2.20% to 3.00%, effective from the January 2023 prize draw. The odds remained fixed at 24,000 to 1. On this date, NS&I also announced changes to its Direct Saver, Income Bonds and Investment account; these changes were effective immediately. There is more information here .
  1. AER stands for Annual Equivalent Rate and enables the comparison of interest rates from different financial institutions and across different products on a like-for-like basis. It shows what the notional annual rate would be if interest was compounded each time it was credited or paid out. Where interest is credited once a year, the rate quoted and the AER will be the same.
  1. Tax-free means the interest is exempt from UK Income Tax and Capital Gains Tax.
  1. Information on NS&I’s on sale products can be found here .
  1. Information on NS&I’s off sale products can be found here .
  1. For further information please contact the NS&I media team.

NS&I media team

   

Sam Faulkner

07814 859 160

sam.faulkner@nsandi.com

Sara Brown

07583 139 113

sara.brown@nsandi.com

Matthew Stocks

07977 149 820

matthew.stocks@nsandi.com

Follow us on Twitter: @ nsandi

Website: nsandi.com