Premium Bonds ‘as unpopular as cryptocurrency’ as interest rates ‘dwindle’ – Daily Express

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NS&I cut rates on its range of savings products in late 2020 and also lowered the chances of winning a prize through Premium Bonds. These changes appear to still be on savers’ minds as many grandparents are choosing to gift other monetary options to their families over “dwindling” Premium Bonds.

“People are now as likely to gift Premium Bonds this Christmas as they are to buy someone Bitcoin”

AJ Bell surveyed 1,046 people in late November and 50 percent of the respondents planned to give monetary gifts at Christmas. Of those respondents, 56 percent planned to gift cash, while 40 percent planned to use gift cards and 18 percent wanted to use an electronic transfer to a bank account.

Following this, four percent intended to use a cheque while just two percent planned to gift cryptocurrency, Premium Bonds or pay into an investment account.

Laura Suter, head of personal finance at AJ Bell, commented: “Cash is still king for people giving money this Christmas, with it being the most popular monetary gift this festive season. However, people’s likelihood of gifting cash varies dramatically by age and it’s the older generations keeping cash alive.

“Grandparents slipping their grandkids a fiver in their Christmas card are helping to maintain the trend of giving cash, as 68 percent of those aged 55 to 64 and 62 percent of those 65 and above are planning to hand over cash rather than a present this year.

“But stuffing some cash in an envelope isn’t just the refrain of older people, as 72 percent of those 44 to 54 plan to give physical cash too. In comparison, just a quarter of 18 to 24-year-olds would give cash and only a third of 25 to 34-year-olds.

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Premium Bonds

Grandparents are turning away from Premium Bonds as gifts (Image: GETTY)

“Premium Bonds, once a more common gift (particularly from grandparents), have waned in popularity, as the interest paid on them has dwindled too. People are now as likely to gift Premium Bonds this Christmas as they are to buy someone Bitcoin – with just two percent of those gifting money planning to do either. Clearly the process for buying Premium Bonds is slightly slicker than transferring crypto, but both are unlikely to make an appearance in most houses this festive season.”

It is somewhat unsurprising that savers are turning away from gifting Premium Bonds as in late 2020, NS&I reduced interest rates across its product range. Ian Ackerley, the NS&I Chief Executive, commented on this at the time: “Reducing interest rates is always a difficult decision.

“In April we cancelled interest rate reductions announced in February and scheduled for May 1.

“Given successive reductions in the Bank of England base rate in March, and subsequent reductions in interest rates by other providers, several of our products have become ‘best buy’ and we have experienced extremely high demand as a consequence.

“It is important that we strike a balance between the interests of savers, taxpayers and the broader financial services sector; and it is time for NS&I to return to a more normal competitive position for our products.”


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Savers abandon NS&I

The impact of these cuts was felt over the following months as in late August, it was confirmed Britons withdrew around £13billion from NS&I between April and June 2021. More than double the £6.1billion taken out in 2020.

NS&I addressed this at the time: “The impact of the interest rate reductions made by NS&I towards the end of 2020 has continued to be reflected in the volume of outflows NS&I experienced in Q1 2021-22, while the opening up of the economy has also had an effect on savers’ behaviour.”

It should be noted that NS&I has increased some of its rates in recent months and it has launched new products to entice savers.

Last month, NS&I announced it would be increasing the interest rate on its Income Bonds. Previously standing at 0.01 percent gross/AER, Income Bonds rose by 14 basis points on November 18. Currently, Income Bonds offer 0.15 percent gross/AER.

NS&I also recently launched Green Savings Bonds for its customers but the new product has been slammed by a number of financial experts.


Cryptocurrency gifts are just as likely as Premium Bonds (Image: EXPRESS)

In October, NS&I launched its Green Savings Bonds which offered a 0.65 percent gross/AER fixed-rate over a three-year term. Martin Lewis criticised this rate, noting only savers who put their morals over their money will see the upside.

He said: “The Chancellor must really hope that the nation is wearing green trousers as the rate being offered is pants.

“It’s only paying 0.65 percent interest a year, a paltry amount compared to what’s available on the open market – it only just matches the top easy-access savings account, yet with the Green Bonds you have no access to your money and it’s locked away for three years.

“The right comparison is to the top three-year fixed savings account and that pays nearly three times what the Green Bonds are paying. And while NS&I is as safe as it gets, with all UK regulated savings institutions you are protected up to £85,000 per person, so that has no practical advantage for most.

“This is quite simply not an account that those whose focus is maximising interest will look at – it’s likely only something those willing to sacrifice substantial interest in order to support what they hope will be green causes are likely to consider.”

Interest rates struggle

Despite the relatively low rates on offer at NS&I, savers may struggle to find decent returns anywhere at the moment.

According to recent analysis from Moneyfacts, the average no notice savings rate is now sitting at 0.1956 percent.

Additionally, its latest “Pick of the Week” showed even the best rates available will not keep pace with inflation.

Rachel Springall, a Finance Expert at, explained: “United Trust Bank has increased a selection of its fixed bonds this week, including its UTB 15 Month Bond which has increased by 0.05 percent. Savers comparing short-term fixed accounts may well find this an attractive option, as at 1.40 percent, the deal sits within the top 10 compared to bonds with a similar term.

“Unsurprisingly, this fixed bond does not permit early access or further additions, so savers must be comfortable with their initial deposit and the length of the fixed term. Overall, this account receives an Excellent Moneyfacts product rating.”