Premium Bond savers could win £1million but are they actually worth the investment?

There are currently 21 million people across the UK who hold Premium Bonds with total savings of around £118billion having been put into them. Premium Bonds are a savings product issued by the National Savings & Investments (NS&I). NS&I is backed by the HM Treasury, so 100 percent of the money saved is safe and to add an extra level of security, NS&I is also regulated by the Financial Conduct Authority (FCA).

Premium Bonds are essentially savings accounts that people can deposit and withdraw money from whenever they like.

However, unlike other savings accounts, people don’t earn interest on Premium Bonds savings.

Instead, the Premium Bonds are entered into a monthly prize draw where people could have the chance to win between £25 to £1million tax-free.

If a person saves £1 in Premium Bonds they then receive a unique premium bond number.

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If a person saves £100 then they will get 100 different bond numbers which are then entered into the monthly prize draw.

The monthly prize draw is done by NS&I’s random number generator, known as Electronic Random Number Indicator Equipment (ERNIE).

The winning bond numbers are drawn and then made available on the first working day of each month.

Each month, two Premium Bond holders win £1million while six bondholders could win £100,000.


Each investment must be at least £25 with the maximum investment being £50,000 and people can only invest amounts in whole pounds.

Any numbers over £50,000 won’t be eligible to win prizes and if these numbers win prizes in error, NS&I has the right to reclaim the prize.

As Premium Bonds do not pay any interest but are instead entered into a prize draw, people’s savings could lose value over time due to rising inflation.

The annual prize fund interest rate is currently 1.4 percent from June 2022.

This is up from the one percent which it had been previously since December 2020.

This means that for every £100 paid into Bonds, an average of £1.40 a year is paid out, although this is not guaranteed.

With the official rate of inflation currently at 9.9 percent, the average return for Premium Bonds currently is not enough to beat inflation.

Premium Bonds may be able to beat some cash savings accounts, and a win will provide better returns than a current savings account ever could, however, the chances of winning are indeed slim.


As a result, people may wish to look into the option to see if it is the right choice for them.