National Savings & Investments (NS&I) is hiking the Premium Bond prize fund rate from 3.3% to 3.7% in the July draw - the highest rate in 15 years.
The change means there will now be an extra £39million in prizes available to be won each month by bondholders.
The move means there are 320,000 more chances of winning prizes worth between £50 and £100 - however, the number of £25 prizes in the draw will fall.
There's also less of an increase for prizes between £500 and £100,000 and there will still only be two monthly winners of the top jackpot prize of £1million.
There's very little change to the total number of available prizes at just over five million.
The move marks the sixth prize fund rate increase for Premium Bonds in just over a year.
NS&I says the changes are part of its strategy to “balance the interests of savers, taxpayers and the broader financial services sector”.
It is also likely that NS&I is trying to lure in savers and compete with rising interest rates on savings accounts - the current base interest rate is set at 4.5%.
NS&I Chief Executive, Dax Harkins, said: “This is now the sixth prize fund rate increase for Premium Bonds in just over a year, making it the highest it’s been in over 15 years.
"With the changes, we’re expecting to pay out more than £374million to winners in July with more higher value prizes, meaning that, each month, more lives will be changed by Premium Bonds."
Premium Bonds are essentially a savings account you can put money into, where instead of being paid interest, tax-free prizes are awarded in a monthly draw.
Premium Bonds are often described as a “cross between a savings account and the lottery” because of this - and they are hugely popular with savers.
More than 22 million people currently save in Premium Bonds.
Premium Bonds are offered through NS&I, which is backed by the Government, meaning all your money is safe.
You have to buy Premium Bonds to be in with a chance of winning the prize and each £1 bond you purchase has a chance of winning a prize each month.
The minimum purchase amount is £25 and the maximum you can have invested in Premium Bonds is £50,000.
If you win, then the prize money you get is tax free.
However, as the chance of winning sits at 24,000 to one, it means for every 24,000 bonds, only one bond will win a prize and 23,999 bonds won’t get anything at all.
The value and number of Premium Bonds in June and July
- £1,000,000 - June: 2 - July: 2
- £100,000 - June: 63 - July: 71
- £50,000 - June: 125 - July: 141
- £25,000 - June: 252 - July: 284
- £10,000 - June: 627 - July: 707
- £5,000 - June: 1,257 - July: 1,417
- £1,000 - June: 13,361 - July: 14,960
- £500 - June: 40,083 - July: 44,880
- £100 - June: 1,421,012 - July: 1,744,225
- £50 - June: 1,421,012 - July: 1,744,226
- £25 - June: 2,163,534 - July: 1,503,501
June prize total: £334,047,650
July prize total: £374,026,425
