National Savings & Investments (NS&I) is to reduce the number and value of Premium Bond prizes, following the cut in the Bank rate to 3%.

The total Premium Bond prize payout will fall from £87.8 million this month to around £57 million in January 2009. The number of will go down from 1.54 to 1.1 million.

There will still be two £1 million jackpot prizes a month, but the overall odds against a prize have risen from 24,000 to1 to 36,000 to1 per £1 bond.
 
In the past few months NS&I has seen a big increase in money flowing in from the public, who see its products as a safe haven for savings at a time  of turbulence and uncertainty in the banking sector.

But NS&I rates have now gone down twice in two months: they were cut in October after the Bank of England reduced the Bank rate from 5% to 4.5%, and again with the reduction to 3%.
 
Apart from, Premium Bonds, other variable NS&I savings rates are being reduced: on ISAs, income bonds, investment accounts and savings accounts.

The Cash ISA rate has been cut from 3.9% to 2.4%, while the rate on income bonds has gone down by slightly less (1.3%) than the 1.5% Bank rate cut.

NS&I has even raised its rate on one account: from 1.15% to 1.45% for Easy Access savings account holders with between £5,000 and £9,999 on deposit.

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