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Are Premium Bonds still worth buying?


Premium Bonds – first issued back in 1956 – remain incredibly popular today, with over 22 million people holding 109.29 billion eligible Premium Bonds in total. Holders are lured in by the promise of a safe place to keep their cash, as well as the chance to win cash prizes each month, awarded at random out of the interest that has been generated by the bonds. Prizes are worth up to £1m each every month – but what is the likelihood of winning, and could that money be better invested elsewhere? 

What are the chances of winning with Premium Bonds? 

A recent Freedom of Information request, made by The Sunday Telegraph, revealed that nearly £1.17bn of Premium Bond prizes was paid out between April 2019 and March 2020. However, despite these sizeable sums, the request also showed that 15.9 million Premium Bond holders – nearly three-quarters of those who own Premium Bonds – had not won a single prize since NS&I records began in 2007. 

The report reveals that each £1 bond offers a 1 in 34,500 chance of winning any prize – and, as expected, those who hold higher values have a greater chance of winning. In the May 2021 draw, for example, 73 of the 185 bonds that won prizes with a value of £5,000 or more were part of portfolios that held the maximum value of £50,000 in bonds. 

Should I invest my money elsewhere? 

Further figures from NS&I show that 43% of all Premium Bonds are held by just 920,000 people – 4.3% of all Premium Bond holders – who hold the maximum £50,000 value. Furthermore, 98.5% of those who have never won hold bonds to the value of £1,000 or less. 

With average savings rates falling to a historic low at the end of 2020, it is likely that the continued influx of Premium Bond holders could be a result of the possibility – however small – of winning a prize with a value significantly higher than what a regular savings account could offer. But is this likely to happen in reality? 

James Blower, founder of The Savings Guru, says that individuals who hold £16,000 or more in Premium Bonds are potentially likely to average a prize every other month. “Unless you have this level of savings, or are completely comfortable with taking a gamble that your savings may not generate any return at all, then my advice is to look at other savings products”, he says. His advice? Stick to regular savings accounts instead. 


“Stable Rise Limited is not authorised or registered by the Financial Conduct Authority. The marketing materials are not intended to provide financial advice nor promote any individual financial products.”

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