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Even Premium Bonds are feeling the pain!

In a sign of the times, it has been revealed that the National Savings and Investment company (NS&I), which administers the Premium Bond fund on behalf of the government, has decided upon a significant reduction in the prize fund. The fund will be cut from £58.9 million per month to £32.2 million a month which has effectively doubles the chance of hitting the jackpot to 36,000,000,000 to one.

The NS&I have also confirmed that from next month the Premium Bond prize fund interest rate will fall from 1.8% to 1% in line with the ongoing reduction of UK base rates. As of next month there will only be one £1 million jackpot prize as opposed to two in the past although a new £25 prize will be introduced leaving the chances of a win at 36,000 to one.

Even though the vast majority of people buy Premium Bonds purely for the chance of winning a prize they will not be best pleased to hear the reduction in the interest rate and the announcement that NS&I cash ISAs, income bonds and investment accounts will also suffer a reduction in income. While the move with regards to interest rates and the prize fund for Premium Bonds was almost inevitable it further highlights the fact that UK base rates have fallen to levels not seen in recent times.

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