National Savings & Investments has increased its Premium Bond prize fund rate to 1.5%.

National Savings & Investments (NS&I) are to increase prize money on offer to Premium Bond holders next month by 50%.

The prize fund payout rate will increase from 1% to 1.5% in October, taking the total payout for the Premium Bond draw from £33.8 million to £52.5m.

Odds of winning will increase from 36,000 to one to 24,000 to one, meaning an extra 500,000 prizes will be distributed.

The news comes after a flood of holders withdrew their investments after March this year when the prize rate was cut from 1.8% to 1%, in accordance with the Bank of England’s interest rate.

23 million people currently hold Premium Bonds, with around £40 billion invested in them. A draw takes place every month with one prize of £1m on offer and other smaller figures, all tax-free.

Peter Cornish, Director of Customer Offer at the NS&I, said: “Premium Bonds are hugely popular with our customers and we know that winning prizes frequently is particularly important to them.

“These changes mean we can increase the frequency of an envelope from ERNIE (Electronic Random Number Indicator Equipment) on their doormat.”

In its statement, NS&I also claimed that its interest rates are reviewed each month in order to balance the interests of its savers with the financial market.