Huge wins at a Premium

PREMIUM Bonds are the nation's favourite investment, but with National Savings & Investments (NS&I) cutting the prize fund rate are they still the best home for your cash?

- Harvey Jones

NS&I will cut the underlying rate on Premium Bond wins from 4% to 3.8%, starting with April's draw.

The cuts have focused on the bigger prizes, in order to keep the chances of a win the same at 22,000 to 1.

There will be four fewer £100,000 prizes, down from 82 to 78. The number of £50,000 prizes will be cut from 164 to 157. There will also be 15 fewer £25,000 prizes and 39 fewer £10,000 ones.

Greig Bingham, head of financial modelling at Broadstone, said savers are now less likely to "win big": "There is a higher probability of snagging £25, the lowest prize."

The two £1million jackpot prizes remain. As this hasn't been increased since 1994, it has been dramatically eroded by inflation. If it had climbed with prices it would pay a staggering £2.75m today.