NS&I increases Premium Bond rate as inflation rises

This comes amid the UK’s cost of living which has seen inflation skyrocket to the detriment to savers. According to NS&I, more than 2.7 million savers are set to benefit from the interest rate hikes for the savings accounts. On top of this, Premium Bond’s prize fund rate rise will see more people become winners of the financial institutions.In September of this year, NS&I increased the prize fund rate for Premium Bonds from 1.40 percent to 2.20 percent.As a result, the chances of someone winning a cash prize have also improved from 24,500 to 1 to 24,000 to one.Earlier this year, the interest rate on the organisation’s Direct Saver, Income Bonds, Direct ISA and Junior ISA were also raised.Both the Direct Saver and Income Bonds pay a rate of 1.80 percent, while the Direct ISA and Junior ISA rates were increased to 1.75 percent and 2.70 percent, respectively.READ MORE: Britons urged to consider ‘simple’ boiler hack that could cut energy bills by £112 a year NS&I increases rates of Premium Bonds and other savings accounts – does it beat inflation? (Image: GETTY)On top of this, NS&I’s Guaranteed Growth Bonds, Guaranteed Income Bonds and Fixed Interest Savings Certificate will be raised from December 1, 2022.Ian Ackerley, the NS&I’s chief executive, outlined why the financial institution is opting to increase interest rates at this moment in time.He said: ‘(These) increases across our variable and fixed-rate products mean that our customers get a welcome boost to their savings.’The changes come in the same month that we increased the Premium Bonds prize fund rate.DON’T MISSPIP claim: The top 5 medical conditions giving £627 a month from DWP – check eligibility [INSIGHT]’I now get money every month!’ Woman, 65, shares way she found extra money for retirement [INSIGHT]NS&I is increasing interest rates on savings accounts up to 3.7% – millions set to benefit [UPDATE]’Some of the rates we’re now paying – including on Premium Bonds – are the highest that they have been in over a decade, which is great news for savers.’The changes to interest rates we’ve announced today will help ensure that our products are priced appropriately when compared to those offered by our competitors.’As it stands, the Consumer Price Index (CPI) rate of inflation is at a 40-year high of 10.1 percent.Due to this, NS&I’s latest interest rate increases have been unable to compete directly with the UK’s inflation rate as it stands.READ MORE: Attendance Allowance: 6 myths that stop millions of pensioners claiming up to £370 a month  How much have interest rates risen by? (Image: EXPRESS.CO.UK) What other savings accounts does NS&I have? (Image: EXPRESS.CO.UK)’Raising rates should strengthen the pound. So far, this hasn’t been the case, especially compared to the dollar as the US has raised rates more sharply than the UK.’With the base rate now at three percent, this will mean misery for many households already under financial pressure due to the cost of living crisis.’Following this series of rate rises, the strengthening pound and the Energy Price Guarantee, we hopefully won’t see inflation reach the BoE’s prediction of 13 percent.’Nevertheless, its current level of 10.1 percent, which is a 40-year high, is already having a big impact on the average wallet.’