Martin Lewis warns 24 million people with NS&I Premium Bonds accounts

Martin Lewis has warned Premium Bonds holders may want to re-evaluate their accounts in the wake of a fresh rate cut next month. As we head into December and Christmas, Premium Bonds holders face a drop in their chances of winning.

The 52-year-old ITV and BBC star warned: "For those people only putting a small amount in and who don't pay tax on savings - which is a lot of people - premium bonds are a bad bet. I mean, there will always be someone who beats the odds and has more than typical luck but they're a bad bet."

More than 24 million people own Premium Bonds, which are a kind of savings bond offered by National Savings and Investments (NS&I), the Treasury-backed bank. Each month there's a raffle of Premium Bonds and prizes ranging from £25 to £1 million are doled out.

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From the December 2024 draw, the prize fund rate for Premium Bonds will change to 4.15%, down from 4.40%. The odds of winning will reduce to 22,000 to 1 from the current odds of 21,000 to 1. The prize fund rate for Premium Bonds was last changed in March 2024.

The December Premium Bonds draw is expected to have over £435 million in the prize fund with over 5.7 million prizes ranging from two £1 million prizes to over 1.5 million £25 prizes. He added: "The more you put in, the closer you will get to the prize fund rate. Once you start moving up to between £2,000 and £3,000 and your return is around 3.5 percent, if you would otherwise be paying tax on your savings, then they start to become a decent bet with typical luck.”

"So you will want to fill up your cash ISA already, at that point they become a decent bet, especially if you can max them up and you're lucky enough to put £30,000 to £50,000 in, especially if you would be paying tax on your savings otherwise." He added: "I accept the idea of psychology that people like dreaming big and winning £1 million."

He said: "Premium bonds can work for people who have a lot of savings and are paying tax on them, they're not so good for smaller savers."