If you want a regular income, Premium Bonds may not be the best option for you - you may be better off looking at different types of investment or savings accounts, including isas. You'll also receive no interest, as the interest accrued on bonds goes towards the prize fund.
There's no investment risk: Because Premium Bonds are government-backed there is no chance of losing your money. This used to be more of a selling point, but the Financial Services Compensation Scheme (FSCS) currently protect all UK savings accounts up to £85,000 per person, per institution the savings are held with.
Premium Bonds could be worth investing in if you: Have a lot of money to save (the more bonds you have, the bigger your chance of winning a prize) Pay tax on savings interest (and have already used up your annual cash ISA allowance) Like the idea of a prize draw (you could win big, but you also may not win anything)
While Cash ISAs and Premium Bonds are very low-risk, they are unlikely to offer high returns. If you're happy to take more risk for the possibility of better returns, then a Stocks and Shares ISA might be better for you.
If you want instant access to your cash, have £50,000 to invest, and especially if you pay higher rates of tax they are good value, returning on average around 2pc a year tax-free. But it is a close-run thing as market rates from banks and building societies are rising rapidly. Premium Bonds work like this.
Each £1 placed into Premium Bonds has an equal chance of getting a prize, so the more savings you have, the more chance you have of winning. Martin emphasised that Premium Bonds won't pay out much more on average than the interest on easy access or fixed rate savings accounts.
No, any winnings from Premium Bonds are completely tax-free. Similarly, most people who put money into a savings account don't usually pay tax on the interest they earn unless they have a very high balance.
Premium bonds offer both novice and experienced investors the security of a government-backed savings account, with the chance to win up to £1million each month.
Dealing with Premium Bonds after someone's death
Assets are generally sold or encashed during the administration period, although some can be transferred to beneficiaries who wish to keep the holding.
How long does it take to cash in Premium Bonds? According to NS&I, it takes up to three banking days for the money to reach your account, unless you have elected to cash in after the next draw.
A person would buy a bond at a premium (pay more than its maturity value) because the bond's stated interest rate (and therefore the bond's interest payments) will be greater than those expected by the current bond market.
One in a million
Our Agents Million have the important task of delivering the winning news in person to the two monthly jackpot winners. Since the first Premium Bonds millionaire in 1994, over 400 new millionaires have been paid a visit.
NS&I announced on 27 September 2022 that the Premium Bonds prize fund rate would increase from 1.40% to 2.20%, with the odds changing from 24,500 to 1 to 24,000 to 1. The changes were effective from the October 2022 prize draw and more information can be found here . 3.
Tax and you do not need to declare it on your tax return. Anybody over the age of 16 can buy Premium Bonds, and you can also buy them on behalf of your child or grandchild.
Are my old Premium Bonds still valid? Yes. As long as you haven't cashed your Bonds in, they're still valid and they're still being entered into our monthly prize draws.
As a result of NS&I's decision, the odds of winning has now changed to one 24,500 for each bond someone holds. Unlike other savings accounts or products, Premium Bonds does not acquire interest in a traditional way.
Our Premium Bonds give you the chance to win cash prizes from £25 up to £1 million in our monthly prize draw. If you're a lucky winner, you won't have to pay a penny in tax on your prize. If you already hold some of our Savings Certificates, you won't have to pay tax on any returns you earn.
If you live outside the UK, please check if local regulations let you hold Premium Bonds. For example, the US has strict gaming and lottery laws which mean that it might not be possible or practical to hold Premium Bonds while in the US. If you're allowed to hold them, you'll need to apply first by post.
You never need to worry about an unclaimed prize. We'll hold on to it until you get in touch with us. And there's no time limit to make your claim. Just log in to view your prize history, or use our prize checker to see if you have any prizes you don't know about yet.
How to claim Premium Bonds after a death. The Executor can trace and claim Premium Bonds belonging to the deceased either online or by post. If applying by post, they must include a copy of the death certificate and the Will. If applying online, the Executor must complete a bereavement claim form.
The nearest thing Premium Bonds have to an interest rate is their annual prize rate, which is currently 3%. The interest rate describes the 'average' payout, but it's just a vague watermark.