June 1, 2020 4:21:11 PM
An extra £1.5 billion worth of Premium Bonds were snapped up in April as savings rates were tumbling, according to analysis.
MoneySavingExpert.com, which carried out the research, said it was the highest number of bonds bought in one month since December 2006.
At that time, a special 50th anniversary draw with five £1 million pound winners attracted just over £2 billion worth of bonds.
MoneySavingExpert said that for “normal” draws, the April total is the highest in records going back to April 1994.
NS&I, which is backed by the Treasury, recently cancelled plans for rate cuts to Premium Bonds and some savings accounts. Many other savings providers have been chopping deals in response to recent cuts to the Bank of England base rate as part of emergency measures to deal with the financial impact of coronavirus.
Helen Saxon, banking editor at MoneySavingExpert.com, suggested it is likely the extra money NS&I is raising will be used to cover the cost of the Government’s coronavirus support schemes such as its furlough and self-employed support initiatives.
She said: “With many savings rates plummeting in recent months, and NS&I bucking the trend by cancelling its planned rate cut, it’s no surprise that people are flocking to Premium Bonds.”
She added: “While many have been hit devastatingly hard and are struggling to make ends meet, there is also a sizeable group of people who are earning their normal salary but are unable to go out and spend it as they normally would. It’s likely many of these ‘accidental savers’ have turned to Premium Bonds, or at least added to bond holdings they already had.
“If you do have money to save and you’re looking for a decent rate and thinking about Premium Bonds, it’s important to remember that the advertised 1.4% prize rate is just an indication, and it’s possible you could win absolutely nothing. But, with savings languishing at very low rates, if you’re happy to take a chance then Premium Bonds aren’t currently a bad place to put your money.”