Premium Bond Pay Out Cuts
Published / Last Updated on 12/02/2017
Premium Bond Pay Out Cuts.
National Savings and Investments has announced at cut in interest rates across its range of products which also means a cut in the “pay out” rate for Premium Bonds.
With effect from May, Direct ISA rates and Income Bond rates will fall by 0.25% from 1%pa to 0.75% pa. The Direct Saver rate will fall to 0.70%pa.
The stated pay out for “Ernie”, the Premium Bond lottery is currently 1.25%pa of the fund and this will fall to 1.0%pa.
Third less pay outs
Some are speculating that this could result on a cut of a third less pay outs in the small prize fund area of £50 and £100 prizes.
Comment
Given sustained low interest rates and a further cut by the Bank of England after the Brexit vote of 0.25%pa base rates, these cuts by NS&I are not a surprise.
Cross Subsidising the New 3 Year Bond?
Are these cuts though being used to fund the new 3 year NS&I Fixed Rate Bond, anticipated around the same time paying 2.2%pa.