According to This is Money savers are set to pour millions into premium bonds next week as the limit on the amount in which you can hold is lifted to £50,000.

As of Monday, the maximum that you can invest in the Government-backed National Savings & Investments bonds rises by £10,000 from its current cap of £40,000.

Those who are hopeful of winning a tax-free prize worth anywhere from £25 to £1million in the monthly draw have been flocking to premium bonds after becoming fed up with banks and building societies low interest rates.

Incredibly , some £6billion has poured into these bonds since last June alone, where the maximum you could hold rose from £30,000 to £40,000 which was the first increase for more than ten years according to This is Money.

Today , 21 million savers have more than £53 billion put away in the bonds. Figures show that this is more than the total savings with Yorkshire BS, Britain’s second largest building society, with assets of around £34 billion.

Figures show that a quarter of a million savers have put in the current maximum of £40,000.

According to This is Money the odds of winning any prize is 26,00o to one for each £1 bond- this will not change following the increase on Monday.

These odds are much better than scooping the top prize in the National Lottery – one in 14 million – and you don’t lose your stake if you don’t win.

NS&I pays out millions of prizes equal to an interest rate of 1.35 per cent a year on the total money held in the bonds – it’s worth about £715million a year.

Unlike savings in a bank or building society, the bonds do not pay out any interest. Your own interest rate will depend entirely on how often, and how much, you win.

At 1.35 per cent in a High Street account, your £50,000 would earn you £675 before tax (£540 after), but it seems savers are willing to forego this for the chance of winning the big prizes.

However, the NS&I prize interest rate can change at any time. It rose from 1.3 per cent in August last year, but the pre-credit crunch rate in May 2008 was a much more generous 3.4 per cent.

Since last August, NS&I has been paying out two £1million jackpots each month, rather than just one.

If you wish to seek independent financial advice on a bond that you have we at Hutt Professional have financial advisers with many years of experience , who would be more than happy to offer you the independent financial advice that you need.

Source : http://www.thisismoney.co.uk/money/saving/article-3097869/Savers-set-pour-millions-premium-bonds-week-limit-hold-lifted-50-000.html    28/05/2015