What is the average rate of return on Premium Bonds? You don't get a Premium Bond interest rate like you would have with most savings products, instead they have an average rate of return. For every £1 bond, the odds of you winning a prize are 24,000 to one, so pretty slim. This translates to a “prize rate” of 3%.
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.
What are the odds of winning premium bonds? Currently, the odds are 24000:1. For each £1 you have invested in premium bonds you have a 24,000 to 1 chance of winning any single prize. As each £1 premium bond is assigned it's own number you just never know which one is going to be the lucky one!
Some investors might hit the jackpot and win a large prize early on, others may invest and wait many months for even a small return. NS&I pays out over 3 million prizes per month, so as the old adage goes, 'you've got to be in it, to win it'!
Other requirements are that the investment is greater than the minimum limit and in whole pounds, and uses a UK bank account which is in the purchaser's name. NS&I states that if a transfer takes a person over the £50,000 limit, then the transfer will be automatically refunded in full to the bank account.
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.
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.
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.
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.
Straight to your bank account
If you win, we'll let you know the good news by email or text message. You'll then normally receive your prize money in your bank account by the 7th working day of the month.
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)
A There are all sorts of theories. However there is absolutely no evidence that holding premium bonds in a single block has a better chance of winning.
How Much Can I Earn From Interest With $50,000? An investor with $50,000 to invest for interest can earn from about $65 to about $2,250 in a year at current rates.
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.
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.
When you buy premium bonds, you are entered into a monthly prize draw where you can win between £25 and £1m tax-free.
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.
Winnings Each Month
You should win one or more prizes from four draws each year.
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.
Dealing with Premium Bonds after someone's death
NS&I does allow them to be held by the estate for one year after death and during this time they will still be entered into the prize draw each month. Any winnings will be sent by warrant, which is similar to a cheque, to the person entitled to claim the money.
If the deceased's Premium Bonds stay in the draw, which they can for up to 12 months (instead of being repaid), who will receive any prizes won? Once we've been told of the customer's death, any prizes won will be paid by warrant (like a cheque) to the person entitled to the money after we've completed the claim.
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.
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.
It's easy to buy Premium Bonds, all you have to do is apply through the NS&I website. Alternatively, you can apply over the phone by calling 08085 007 007 or +44 1772 329880.