• A saver with £1,000 in Premium Bonds still likely to win nothing
• But someone with average luck and £50,000 in savings now stands to return 3.45% over a year in August compared to 3.2% in July
• This would work out as an extra £125 through the year in prize winnings

Analysis by actuarial consultancy OAC (part of the Broadstone Group) of Premium Bonds distribution modelling demonstrates the likely winnings of a median saver after the prize fund rate increases to 4% from August – from 3.7% in July – the highest in over a decade.

What does the prize rate increase mean for savers? The first thing to understand is that the 4% prize fund does not equal a 4% return on a saver’s money.

When you order 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 example, if you have the maximum £50,000 saved, the median saver’s likely return is just 3.45%.

However, the odds of savers winning a prize in August will increase by 9% with the odds falling from 24,000-1 to 22,000-1 compared to July due to the rate increase.

While a median saver with £1,000 in savings will still likely win nothing over the course of a year, because the odds of winning any prize have lowered, the saver’s median return for those with around £9,900 or more invested in Premium Bonds is now larger.

For example, the median saver with £25,000 in Premium Bonds in August would have a median return of 3.4% which works out at an average annual return of £850. This compares favourably to July where a median saver was likely to see 3.1% returns equalling just £775 over a 12-month period.

Those with larger savings pots similarly 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).

Table shows likely return based on Premium Bond savings