Sammie Ellard-King
I’m Sammie, a money expert and business owner passionate about helping you take control of your wallet. My mission with Up the Gains is to create a safe space to help improve your finances, cut your costs and make you feel good while doing it.
In this post, we’re going to look at precisely what premium bonds are and what they’re all about. Whilst trying to answer the question, are premium bonds worth it or not?
We’ve all heard of premium bonds. Even if we don’t 100% know what they are, we’ve listened to the phrase being used on TV and in general conversations.Â
Some people think premium bonds are outstanding, others are a little less convinced. The odds of winning were even increased in June of this year but still many remain skeptical of them and rightly so. It’s a essentially a lottery.
First introduced in 1956 by Harold Macmillan premium bonds have become another way to win money but the catch is you don’t lose what you put in. Sounds great right?!
Table of Contents
What are premium bonds?
You might not know this, but premium bonds are the most significant savings product in the United Kingdom. National Savings & Investments (NS&I) premium bonds are basically savings accounts.Â
They are a little bit different to traditional savings accounts though. You can put money in and take it out when you want.Â
However, instead of interest being paid on the money you put in, there are monthly draws where your bonds can win prizes. All bonds have an equal chance of winning, so the more you buy, the more chances of winning you have.Â
Furthermore, there is no start-up fee or handling charge to pay, with no minimum or maximum time limit for holding premium bonds. The minimum amount you can pay in is £25, with the maximum you can hold being £50k.Â
NS&I promote the monthly draws on their website, with a big countdown feature counting the days until the next draw. You must hold the bonds for a full month before they become eligible to win. So if you pay £25 on April 15th, it wouldn’t be part of the draw until June.
Where can you buy premium bonds?
If you want to get your hands on some premium bonds and fancy being part of the monthly draw, you need to know where to buy them from. The best place to go is the NS&I website where you can set up an account and start buying your premium bonds.Â
You can also top up your premium bonds account via bank transfer from your bank account. You can also set up a standing order so you buy your premium bonds weekly, monthly or whatever time period works for you.
What are the benefits of premium bonds?
There are a couple of benefits of premium bonds. Firstly, they are provided under a Government guarantee to buy them back at the price you paid for them.Â
So if you bought £1000 of premium bonds, you could get £1000 back in a year’s time. There is no risk of them going down in value or you being charged for withdrawing your money.Â
Of course, we’ll get onto potential prizes in a moment. However, anything you win through your premium bonds is tax-free.
This means that any money that your money makes is completely tax-free. At one point, this was a huge benefit of premium bonds however these days, most savings are tax-free anyway.Â
Premium bonds are 100% secure savings and investments backed by HM Treasury. So when you ask if premium bonds are safe, yes, your money is safe.
What can you win with premium bonds?
There are monthly premium bond draws with prizes available to lucky winners. If you have active and eligible premium bonds, they are automatically part of the monthly draws.Â
There are prizes available between £25 all the way up to £1 million. How do you fancy a bit of that action? You might even need to speak to a financial advisor if you won the big prize!
What are your changes of winning something?
Of course, you aren’t guaranteed to win anything. In fact, you are more likely to win £0 than you are anything else.Â
Premium bond users have a 1 in 24,500 chance of winning £25. There are different amounts available, and you have a 1 in 10,375,376 chance of winning £500. 99 people win £10k each month, and two lucky individuals will win the million-pound prize.Â
This is life-changing money, however, it’s worth remembering that, at the same time, 118,160,337,696 will win £0. Ask yourself, are premium bonds worth it?
When are premium bonds drawn?
If you have invested in premium bonds, you might be wondering when premium bonds are drawn. The draws take place, and the results are published on the first working day of the month.Â
This means that, by the latest, results are available by the third of each month. We’ve listed some future dates below.
Month | Premium bond prize draw date |
October 2022 | Monday 3rd October |
November 2022 | Tuesday 1st November |
December 2022 | Thursday 1st December |
January 2023 | Tuesday 3rd January |
February 2023 | Wednesday 1st February |
March 2023 | Wednesday 1st March |
April 2023 | Monday 3rd April |
May 2023 | Tuesday 2nd May |
June 2023 | Thursday 1st June |
July 2023 | Monday 3rd July |
August 2023 | Tuesday 1st August |
September 2023 | Friday 1st September |
October 2023 | Monday 2nd October |
National Savings & Investment tries its absolute best to glam up the prize draw by giving a name to the IT equipment it uses.Â
This goes by the name of ERNIE (Electronic Random Number Indicator Equipment). Really, it’s an audited and fairly simple random number generator.
How to do premium bond prizes get paid?
You can choose for your prices to be paid directly into your bank account, an NS&I Direct Saver account or have them reinvested into more premium bonds. The latter would give you more chances of winning again the following month.Â
However, if you won one of the top prizes, you’d probably want to get your hands on the money. If you are one of the lucky winners, you will be informed by text or email about your success.Â
You can also check if you have won any prizes by using the prize checker on nsandi.com or by downloading the official prize checker app. This is available on both the App Store & via Google Play.
Unfortunately, sometimes people move house or change details without updating their NS&I information. This can lead to winners not being notified about their winnings.Â
Be sure to update your details if needed, so you can be kept in the loop about your premium bonds. Some people choose to receive their prize via cheque which can lead to prizes being left unclaimed.
What happens to unclaimed premium bonds prizes?
Significantly, there are lots of prizes that remain unclaimed. In fact, some of them are from many years ago. The oldest unclaimed prize is from 65 years ago, belonging to a man from Sheffield who won £25 in 1957.Â
Presently, there are big prizes left unclaimed too. In 2007, a London woman won £100k and a lady in Kent won £50k. These are both unclaimed, along with four other prizes worth £25,000 each!Â
Imagine what that money could do for you. It could help you pay those rising energy bills or you could use it as a down payment for a house. Maybe you could finally go on that holiday you’ve been promising yourself to Florida or Tokyo?Â
Make sure your details are up to date and correct. Don’t risk leaving your premium bond prizes unclaimed.
How long to withdraw premium bonds?
Of course, if you need to withdraw your money or have won a prize in the premium bonds draw, you’ll want to know how long it takes to get your hands on the cash. It tasks up to three banking days for the money to reach your account, according to NS&I.Â
Unless of course, you have elected to cash in after the new draw. You will normally receive prize money in your account by the 7th working day of the month.
Average premium bond prize rates?
We know that you are likely to win nothing with every monthly draw. However, there do have to be winners. NS&I say that the average return on your premium bond investment is 1.4%.Â
This means that if you had £1000 in your account, you’d have £1072.46 after five years.Â
Of course, this is an average and again, there is no guarantee of a return. Your £1000 of premium bonds may be worth £1000 in five years time, without any prizes being won. On the other hand, you might be a lucky one and win a monetary prize like £500.Â
However you need to ask yourself, would putting £1000 into a 3% interest rate account be better? Your initial grand would grow to £1161.62 over that time.
So, are premium bonds worth it?
The question is are premium bonds worth it? Hopefully, by reading through this blog post you will get a feel for whether or not premium bonds are for you.Â
If you are happy for your money to sit there and potentially make no money, whilst having a slim chance of winning big money, they could be a great option for you. There will be winners, but the odds are against you being one of them.Â
Remember, the money in your premium bonds account is 100% secure and baked by HM Treasury. So you could try it for a while, knowing you can withdraw it at any point. Or it could be a great place for that annual bonus to go every year.Â
In conclusion, do your research, get a feel for what is right for you and make sure you are happy with where your money is
Share on social media
Disclaimer: Content on this page is for informational purposes and does not constitute financial advice. Always do your own research before making a financially related decision.
