NEW YORK, December 30, 2025, 02:07 ET
- MoneySavingExpert’s latest update shows easy-access savings paying up to 4.5%, with one-year fixes up to 4.46%.
- NS&I says Premium Bonds have a 3.60% annual prize fund rate and 22,000-to-1 monthly odds per £1 bond number.
- Martin Lewis says most savers will do better with guaranteed interest unless tax changes the maths.
MoneySavingExpert updated its savings best-buy list on December 29, showing easy-access accounts paying up to 4.5% and one-year fixed deals topping out at 4.46%, as UK banks compete for deposits.
That matters because Premium Bonds remain a popular place to park cash, but they pay out through a monthly prize draw rather than a guaranteed interest rate. For savers who want certainty, the gap between top bank rates and prize-based returns can be hard to ignore.
NS&I’s prize checker shows the next Premium Bonds results are due on January 3, after the draw on January 2, putting the product back on many households’ watchlists heading into 2026.
Premium Bonds, sold by government-owned National Savings & Investments, do not pay interest. Instead, NS&I funds monthly tax-free prizes using an annual “prize fund rate” — a headline average payout, not a promise that any saver will earn that rate — and said the rate is 3.60% with odds of 22,000 to 1 for each £1 bond number. NS&I Corporate
MoneySavingExpert said the prize rate has been cut over time and can overstate what many holders actually receive. In its guide, founder Martin Lewis wrote that “for most, guaranteed interest from savings is the better option,” while noting Premium Bonds can look better once savers exceed the personal savings allowance — the amount of bank interest that can be earned tax-free. MoneySavingExpert.com
The practical difference is volatility. Premium Bonds can return nothing for long stretches, or more than a top savings account if luck runs hot, because prizes are distributed rather than compounded.
Guaranteed savings accounts pay a stated rate, but the interest may be taxed once allowances are exhausted. That tax drag is why some higher-rate savers still use Premium Bonds as a tax-free parking spot for surplus cash, even when the headline prize rate trails the best bank deals.
In a December 21 column, The Economist noted Britain’s long-running affection for Premium Bonds, saying the jackpot has risen to £1 million but many holders expect smaller prizes to accumulate over time.
A Meyka.com post on Tuesday echoed that trade-off, saying savers were weighing Premium Bonds against easy-access cash rates around 4.4% to 4.5% and arguing that certainty matters for emergency funds and near-term spending.
For households building a cash buffer or saving for bills, the difference between a guaranteed rate and a prize draw can be decisive. Others treat Premium Bonds as a low-friction, government-backed option for money they can leave untouched.
The calculation may shift again if banks cut rates further or if NS&I changes the size of the prize fund. The early-January draw will be another test of whether Premium Bonds keep pulling money as savers reset plans for 2026.
