Premium bond holders, rejoice: your chances of winning something - anything - have technically improved, though the universe still seems determined to test your patience.

From September, the 22 million people who hold the government-backed savings bonds will see more prizes up for grabs. This marks the second time in two months that National Savings and Investments (NS&I) has bumped up the prize fund rate, with one expert noting the UK government's savings bank is 'pulling out all the stops' to lure in more cash.

For the uninitiated: buy premium bonds, and you're entered into a monthly prize draw where you can win tax-free sums ranging from £25 to a life-altering £1m. NS&I is now increasing the prize fund rate - the proportion of total invested amount paid out in prizes - from 3.8% to 4.35% a year, effective with September's draw. That follows a previous hike from 3.3% to 3.8% in July. As a result, the odds of winning with each £1 bond number improve from 22,000-1 to 21,000-1. So, you know, still not great, but mathematically better.

NS&I estimates there will be 308,000 more prizes in September than in this month's draw, with the prize pot swelling by about £63m to a grand total of £497m. They've also cleverly shuffled the prize distribution: more big-ticket items, fewer £25 consolation prizes. The number of £100,000 prizes rises from 83 to an estimated 95, £50,000 payouts go from 165 to 192, while £25 prizes get slashed from just under 2.3m to about 1.7m.

One undeniable perk: premium bond prizes are tax-free, which is particularly lovely for higher-rate taxpayers. If you held the maximum £50,000 in bonds and won the equivalent of 4.35%, that's £2,175 tax-free. But here's the catch: they don't pay any interest, making them more vulnerable to inflation than other savings. And while you could strike it lucky, there's no guarantee you'll win anything at all. A freedom of information request from investment platform AJ Bell revealed that nearly two-thirds (62%) of all premium bond holders have never won a single prize.

If you want a guaranteed return, you might want to look elsewhere - this week, easy-access savings accounts were paying up to 5% interest. Premium bonds may still appeal to savers who've maxed out their Isa allowance or are likely to exceed their personal savings allowance, says Caitlyn Eastell of Moneyfactscompare.co.uk. That allowance is £1,000 for basic-rate taxpayers, £500 for higher-rate ones, and up to £5,000 if you earn less than £17,570 a year.

But Eastell warns that despite improved odds, premium bonds remain a game of chance, and the 4.35% figure 'shouldn't be mistaken for a headline rate.' She adds that with the cost of living still squeezing budgets, it's understandable savers might not want to leave returns to chance. Sarah Coles at AJ Bell echoes that sentiment: the prize fund rate has been upped by a decent amount, and the odds have shortened, 'but it doesn't change the fact that in an average month the average bond holder will win nothing.' Those with smaller holdings are even less likely to see a return - AJ Bell's FoI revealed that fewer than 1% of prizes between February 2025 and January 2026 went to accounts holding less than £1,000.

Still, some experts think upcoming cuts to the cash Isa allowance might drive more people into premium bonds. Currently, you can save up to £20,000 a year in Isas, split as you like between cash and stocks and shares. But from 6 April 2027, for anyone under 65, the cash Isa component will be capped at £12,000. So, if you're looking for a tax-free home for your savings, premium bonds might start looking slightly more appealing - just don't hold your breath for that £1m.