The Prize Fund Rate is the headline annual percentage rate that NS&I applies to the total value of all eligible Premium Bonds to determine the monthly prize pot. For the July 2026 draw, the rate is 3.80%, meaning NS&I distributes approximately 3.80% of the total value of all outstanding Premium Bonds in prizes each year (paid monthly). The rate changes periodically based on market conditions, the Bank of England base rate, and NS&I's Net Financing target.
Crucially, the prize fund rate is NOT a guaranteed interest rate on your individual holding. It is a statistical average (mean) across all bondholders. Because the prize distribution is heavily skewed by the two £1 million monthly jackpots, the median (typical) bondholder earns significantly less than the headline rate. The prize fund rate has varied historically from a low of 1.00% (December 2020) to a high of 4.65% (September 2023), with the all-time high being 7.75% (August 1984).
Real-World Example
If the total value of all Premium Bonds in issue is £133 billion and the prize fund rate is 3.80%, the annual prize fund is approximately £5.05 billion (£133B × 3.80%), distributed as approximately £421 million in monthly prize draws. Of this, approximately 80% goes to low-value prizes (£25-£100), 10% to medium prizes (£500-£1,000), and 10% to high-value prizes (£5,000-£1 million).