With savings rates still tending to frustrate rather than elate, savers have increasingly been looking elsewhere in their attempts to secure an income.
National Savings & Investments (NS&I) is one such place, particularly since it raised the investment limit on its ever-popular Premium Bonds by £10,000 to £40,000 in June.
However, now the Treasury-backed provider has stepped up to the mark once again, and from the August draw an additional 52,000 Premium Bond prizes are to be paid out, as well as a second £1 million top prize.
The prizes have been added after NS&I revealed it would be increasing the annual prize fund rate for Premium Bonds from 1.30% to 1.35% from 1 August 2014.
The annual prize fund rate is paid on the total number of eligible bonds in the draw, which since the maximum investment was increased from £30,000 to £40,000 in June, has increased by over £1.3 billion.
As a result, it is estimated that the prize fund will increase from £51,988,425 in July 2014 to £55,517,300 in August 2014, while the number of prizes will rise from 1,845,745 to 1,898,030.
The introduction of the second £1 million top prize had raised concerns that unless the overall prize rate were to rise, the number of smaller prizes would have to fall to compensate.
Thankfully, however, this will not be the case, with more prizes now pencilled in to be paid at all value levels (except £50,000 where the seven prizes paid before are likely to remain unchanged).
So, besides the additional £1 million prize, the number of £100,000 prizes is expected to rise from three to four; £25,000 prizes from 12 to 15; £10,000 prizes from 33 to 38 and £5,000 prizes from 64 to 76.
At the lower prize levels, it is estimated that 279 additional £1,000 prizes will be paid (taking the overall number to 1,110), along with 837 extra £500 prizes (3,330 overall), and 2,677 more of both £100 and £50 prizes (15,211 each overall).
Finally, and most importantly for income-seekers, an extra 45,793 £25 prizes are set to be paid out each month, taking the total number at the lowest prize level to over 1.86 million.
Although the odds of an individual £1 bond number winning any prize is 26,000 to 1, over 21 million people hold Premium Bonds, attracted by the chance of tax-free prizes and the 100% security that the Treasury-backed provider gives on deposits.
The vital thing to remember with Premium Bonds is that a win, and therefore a return, is not assured. So while the original investment is guaranteed, and can be cashed in at any time, it is also vulnerable to the effects of inflation and, in the absence of regular wins, could see its purchasing power erode over time.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.