Pensioners with Premium Bonds told they can get 'better rates' with this account

Pensioners hoping for a win with their NS&I Premium Bonds may get a better rate of return with other savings options.

Bonds customers may be thinking of switching as the prize fund rate fell again from this month, down from 4% to 3.8%.

In light of the news, have been suggesting alternative savings options that people could look at, such as ISAs and fixed term accounts.

Steven Kibbel, a certified financial planner from , said he has often had retired clients who keep their Bonds as they like the security of having their savings with NS&I, with all their holdings backed by the Treasury.

He shared some ideas for alternative accounts that people could look at: "If someone's thinking about cashing in, it's worth looking at easy-access savings.

"Rates are better than the prize fund rate right now, and the interest is guaranteed. Cash ISAs also offer some tax benefits, and for people who don't need to touch the money for a while, fixed-rate bonds could work well."

He said he had worked with clients who have held Premium Bonds for years but hadn't had any decent wins. Each £1 Bond has an equal chance of winning a prize in the monthly draw, with the odds of winning at 22,000 to one.

But even if you do bag a prize, the vast majority of these are for the lowest amount of £25, with larger prizes for amounts such as £50,000, £100,000, or one of the £1million jackpots.

Mr Kibbel shared a story of some clients who had decided to diversify their savings: "One couple I advised recently moved half their Bond holdings into a 5.2% fixed-rate savings product. Less fun maybe, but far more predictable."

Another of his clients decided to spread out her savings across several fixed term accounts so she would get better rates, without locking down all her savings. The financial advisor said: "It's that kind of planning that makes a bigger impact than hoping for a £25 prize."

Nonetheless, Mr Kibbel said that Premium Bonds may still be a good option for some savers as all the prizes are tax-free, a particular draw if you are a higher rate taxpayer and have used up all your personal savings allowance.

Those on the higher rate can earn up to £500 a year in interest with no tax to pay, while basic rate taxpayers can earn up to £1,000 a year.

Another financial expert encouraging Bond customers to think about switch up their savings portfolio is Peter Tran, a certified public accountant and senior contributor for , a loan calculator website.

He explained: "For the average person with average luck, the return from Premium Bonds usually falls short compared to a good savings account.

"Right now, you can get up to 5.16% on an easy-access account. That's not just higher than the current Premium Bond rate-it's higher than what they offered even before the April cut. And unlike a prize draw, those savings accounts pay out consistently."

Looking at other places you can grow your savings, Mr Tran said: "High-interest savings accounts are more rewarding right now.

"Fixed-term accounts-like one-year or two-year savings with rates around 4.77% or 4.47%-can also give you stability and solid growth.

"And for those thinking longer term, investments like stocks and shares ISAs or diversified funds may do a better job at keeping pace with inflation over time."