The government’s savings arm has confirmed a number of changes for savers from 1 May.

The 20+ million Premium Bonds savers will have less chance of winning as the odds will move from 24,500-to-one to 26,000-to-one.

NS&I has also slashed the number of prizes available from the May 2020 draw, meaning the current 3.47 million pot will fall to an estimated 3.29 million.

The prize fund rate will also be reduced from 1.40% to 1.30% tax-free. Premium Bonds aren’t like normal savings accounts as they don’t pay interest. Instead the interest that should be paid (currently 1.40%) is used to fund a monthly prize draw.

Fixed and variable rate savings products

The Direct Saver will be cut from 1% to 0.70% while its Investment Account will fall from 0.80% to 0.60%.

NS&I confirmed that customers holding Guaranteed Growth Bonds, Guaranteed Income Bonds and Fixed Interest Savings Certificates, and whose investments mature on or before 1 June, will receive the higher rate if they automatically renew on a new issue of the same term.

Here’s what’s changing:

• Income Bonds: from 1.15% to 0.70%
• 1-year Guaranteed Growth Bonds: from 1.25% to 1.10%
• 2-year Guaranteed Growth Bonds: from 1.45% to 1.20%
• 3-year Guaranteed Growth Bonds: from 1.70% to 1.30%
• 5-year Guaranteed Growth Bonds: from 2% to 1.65%
• 1-year Guaranteed Income Bonds: from 1.20% to 1.05%
• 2-year Guaranteed Income Bonds: from 1.40% to 1.15%
• 3-year Guaranteed Income Bonds: from 1.65% to 1.25%
• 5-year Guaranteed Income Bonds: from 1.95% to 1.60%
• 2-year Fixed Interest Savings Certificates: from 1.30% to 1.15%
• 5-year Fixed Interest Savings Certificates: from 1.90% to 1.60%.

Ian Ackerley, NS&I chief executive, said: “Reducing interest rates is always a difficult decision. We need to ensure our interest rates are set at an appropriate position against those of our competitors. These changes reflect NS&I’s requirement to strike a balance between the needs of our savers with taxpayers and the stability of the broader financial services sector.

“We believe our new rates offer our customers a fair return and the assurance of the 100% HM Treasury guarantee on all their holdings with NS&I.”