From August’s draw, the Premium Bonds prize fund rate will increase from 3.7% to 4% – the highest level since 2007.

Meanwhile, the odds of each bond winning a prize will improve from 24,000 to one, to 22,000 to one – the best chance in nearly 15 years.

According to the government’s savings arm, National Savings & Investments (NS&I), this will see an extra £30m and additional 460,000 prizes up for grabs.

While the prize fund rate increase to 4% is positive, it’s important to remember that this doesn’t mean a 4% return on a saver’s money. Premium Bonds aren’t like normal savings accounts as they don’t pay interest. Instead, the interest that should be paid is used to fund the monthly prize draw.

Analysis by actuarial consultancy OAC explained that if you ordered all the prize winners over a year, the person in the middle with average luck – the median saver – would get a lower return than 4%. For those with the maximum £50,000 invested, the median saver’s likely return is just 3.45%

However, the odds of winning a prize in August will increase by 9%, but a median saver with just £1,000 is still likely to win nothing over the course of the years, while those with £9,900 or more are likely to see their returns boosted.

OAC, part of Broadstone Group, explained that a median saver with £25,000 primed for August’s draw would have a median return of 3.4% which works out at an annual return of £850, compared to £775 in the year based on July’s rates.

Those with larger savings pots benefit from larger, more frequent wins – a £50,000 median saver sees their returns rise from 3.2% to 3.45% amounting to a £125 increase (change from £1,600 to £1,725).

Greig Bingham, head of financial modelling at OAC, said: “The increase to the prize rate means that savers now stand a far better chance of winning in the Premium Bonds.

“While it is difficult to quantify what the prize money will translate into for a regular Premium Bond saver, by using this financial modelling we are able to work out the annual returns for a saver with average luck.

“While the median return lags behind many cash savings accounts which have upped their rates in the wake up of rising interest rates, the slim possibility of scooping a life-changing sum may be enough to attract more savers to Premium Bonds.”