National Savings & Investments cut premium bond payouts by more than £ 31 million this month, as it delivered hefty cuts to Britain’s best-loved savings product.
There was little Christmas goodwill for savers from the Treasury-backed bank, as the number of tax-free prizes awarded during the December draw was cut by 1.1 million compared to last month.
The most valuable prizes were most affected by NS & I’s cuts, with payouts dropping by at least 40 percent from £ 100,000, £ 50,000, £ 25,000, £ 10,000 and £ 5,000 between November and December.
High value prizes fell by the largest percentage, but all payouts except the £ 1 million jackpot were cut in December
Only the two £ 1 million jackpots won this month by women from Manchester and South Gloucestershire were unaffected by the cuts, extending the odds of a £ 1 bond winning a prize from 24,500 to 1 to 34,500 to 1 and the effective rate on them drop from 1.4 percent to 1 percent.
But the Treasury-backed bank also brought some good news to savers, as it announced it had delayed plans to abolish postal checks until next spring.
It came after a response from savers who had been having trouble registering their bank details and getting through on the phone.
It was planned to start shipping the paper warrants from this month with the last one shipping in February, but said it would delay the move ‘until it’s much easier for customers to contact NS&I’ , after admitting that savers had faced “difficulties.”
NS&I announced the cuts in premium bonds in late September, along with cuts in some of its other savings accounts, which cut interest paid on some previously market-leading accounts to just 0.01 percent.
Those cuts took effect last week, with the Premium Bond cuts taking effect in this month’s drawing.
It means that despite there being £ 1.48 billion more £ 1 Bonds in December’s drawing, as savers continued to deposit money into the tax-free accounts, 1.11 million fewer prizes were handed out.
More than £ 1.2 billion in new Bonds have been landed each month since May as savers left with extra money from the coronavirus blockade have put them into NS & I’s best-known account.
|Month||Total premium bonds in the drawing||New bonds in the draw|
Bonds are eligible for the draw after they have been held for a month, making the number of new bonds in each month sort of a lagging indicator of how much money NS&I is raising from savers.
The record has been pouring into Premium Bonds and NS & I’s other accounts since March, hitting its £ 35 billion fundraising target for 2020-21 in just six months.
In total, Ernie, NS & I’s random number generator, handed out 2,868 million prizes worth £ 82.46 million this month, down from 3,978 million worth £ 113.7 million in November.
In total, this meant that the total money paid out by NS&I was almost 27.5 percent.
Are they still worth it?
But with banks and NS&I cutting rates on easily accessible savings accounts in recent weeks, and rates on all available accounts hitting near record lows, the 1 percent tax-free interest rate savers on premium bonds still looks attractive.
The highest easily accessible rate at This is Money’s best-buy tables currently pays just 0.6 percent and limits savers to two withdrawals per year.
The savings rate has fallen since NS&I announced its cuts at the end of September, with accounts previously supporting the market for months.
According to figures from Moneyfacts, some 20 top interest savings contracts were canceled or withdrawn from the sale in a fortnight between November 16 and the end of last month.
Anna Bowes, co-founder of the Savings Champion website, said: “ While it is disappointing to see that interest rates on the prize fund and with it the number of available prizes have decreased, I think many will stick with their Premium Bonds because that there just isn’t anywhere else where it’s more attractive to go.
“I’ll keep mine.”
Winners of Premium Bonds
|price||Surface||Value of the tire|
|£ 1,000,000||Manchester||£ 10,000|
|£ 1,000,000||South Gloucestershire||£ 45,000|
|£ 100,000||Hereford and Worcester||£ 25|
|£ 100,000||Essex||£ 10,000|
|£ 100,000||Outer London||£ 12,000|
|£ 100,000||Northamptonshire||£ 10,000|
|£ 50,000||Hertfordshire||£ 30,000|
|£ 50,000||Inner London||£ 50,000|
More winners from December 2020
NS&I folds on paper changes
This month would also be the first in a three-month phase of phasing out paper price controls as NS&I wanted to deposit all Premium Bond prices directly into savers’ bank accounts.
However, it announced this morning that it had changed course due to difficulties customers encountered registering their details or reaching the bank by phone.
We have repeatedly reported on the issues that NS&I customers have faced in recent months, where the decision to scrap physical warrants has been frustrating for those who wanted to continue to receive them that way or who struggled to get their data. provide.
NS&I had to roll out paper price controls between December and February to save money, but has delayed the move due to the difficulties savers encountered in providing bank details
NS&I had tried to make it easier for savers to register their bank details without logging in to online banking or providing an email address, but many still faced long waits on the phone.
While it has always encouraged savers to go online whenever possible, it has today addressed the pressure savers have put on wee and said it would delay the phasing out of price orders until spring 2021.
Some customers who automatically reinvest their winnings but have reached the £ 50,000 maximum were first given a price guarantee in December and were falsely told that the checks would no longer be sent.
NS&I said it was unable to remove this message until it was sent, and they would continue to receive checks until they chose to have their winnings deposited into their bank account, after which the message was removed next month.
The bank said today: “Since January 2020, more than 1 million customers have switched from receiving paper warrants to having their prices deposited directly into their bank account or automatically reinvested.
NS&I acknowledges that some customers have had problems and longer waiting times when contacting NS&I to provide their bank account information. It was therefore decided to give customers more time to do this.
NS&I regrets the problems some customers have encountered. The phasing out of price guarantees will only start when it is much easier for customers to contact NS&I. ‘
Some of the links in this article may be affiliate links. If you click on it, we can earn a small commission. That helps us fund This Is Money and use it for free. We do not write articles to promote products. We do not allow commercial relationships to affect our editorial independence.