I USED to eagerly check my premium bonds every month in the hope that I had finally bagged the £1million top prize.
But in the 26 years I’ve had the bonds all I’ve won is a measly £25 – barely enough for a meal out.
So, when the prize rate was cut to 3.6% this month I decided it was time to move my money elsewhere.
I’ve withdrawn my savings and put the cash into a high interest rate Isa, where it’s guaranteed to grow.
I don’t have to think about the money and reckon I’ll earn hundreds of pounds in interest this year.
More than 22 million people in the UK have premium bonds but I know most of them would be better off putting their money elsewhere.
Here I explain your odds of winning the top prize and why you’re a mug for wasting your money.
I was shocked when I heard the odds
I’ve always thought that if I had premium bonds for long enough I would eventually win a big prize.
So I was shocked to learn that the odds of winning are a huge 22,000 to one for every £1 bond you have in the monthly prize draw.
The winning bond numbers are chosen by ERNIE, NS&I’s Electronic Random Number Indicator Equipment.
Premium bonds have an annual prize fund rate of 3.6%, which theoretically means that if you pay £1,000 into the account you should get a return of £36.
But for most people the actual return on their cash is much lower.
In reality only a third of savers have ever won a prize – and for many of them it will have been just £25.
Plus, your chances of winning are much better if you have paid in the maximum amount, which is £50,000.
I don’t have that kind of cash sitting around, so I know I could get a better return by moving my money.
Of the 75 winners who won £100,000 this month, only ten had less than £25,000 in premium bonds.
How to check if you’ve won
IF you think you might have an unclaimed prize, the best way to check depends on what info you have about your Premium Bond account.
You’ll have been given both a Premium Bond holder’s number and an NS&I number.
- If you know your Premium Bond holder’s number, you can go to the NS&I website or download its prize checker app. Enter your holder’s number and it’ll tell you if you’ve any unclaimed prizes.
- If you don’t know your holder’s number, but have your NS&I number, you can use that number – which you’ll find on any letters from NS&I – as well as your surname and password to log in to NS&I online and find your holder’s number on the “account details” page. NS&I’s prize checker app also accepts your NS&I number.
- If you don’t know your holder’s number or account number, you can phone NS&I on 08085 007 007 or write to it and ask for a replacement bond record to be sent to you. You should give as much detail as you can, for example your full name, address details, when and where you bought your Premium Bonds and how much they’re worth.
- Alternatively, you can use NS&I’s tracing service or the My Lost Account website, both of which can track down your Premium Bond details. They ask you to fill out info about yourself including your name, address, an estimate of how many Premium Bonds you hold and how long you’ve held them.
- If you find you do have an unclaimed prize, you’ll need to write to NS&I at: NS&I, Sunderland SR43 2SB. Give as much information as you can, including your name and any information about your Premium Bonds.
- Prizes will then be sent to your home address as a warrant, which is like a cheque. Unfortunately, you can’t have unclaimed prizes paid directly into your bank account.
- The process is slightly different if the Bond holder has died – you’d first need to inform NS&I of the death and then follow the steps above. Any prize money will be paid to whoever inherits the Bond holder’s estate.
Meanwhile, of the 18,642 winners in the draw, 11,312 had £50,000 worth of premium bonds.
By opting for a fixed-rate account I can guarantee the return I get on my money .
Only a handful of top prizes up for grabs
I’ve always dreamed of what I would do if Agent Million came knocking on my door.
But when I saw the number of each prize on offer I knew it was more of a pipe dream than a reality.
Of all the prizes on offer just 10% are “Higher value” and are worth between £5,000 and £1million.
Around 10% of the prizes are “Medium value” and worth £1,000 or £500.
Meanwhile, 80% of the prizes are “Lower value” with 2,578,741 worth just £25.
That means even if you manage to bag a prize, you’re most likely to walk away with less than £100.
The number of prizes of each value are also variable, so they can change from time to time.
That means sometimes there will be even fewer top prizes up for grabs.
Rate cuts are on the horizon
The premium bond prize rate has been steadily falling over the last year and experts say it’s likely to continue in the coming months.
The current 3.6% rate is a two year low and is well below the peak of 4.65% seen in September 2023.
NS&I sets its rates in order to bring in a certain amount of money for the government – which means the rate will be cut once it has attracted enough money with premium bonds.
Last year NS&I said it had exceeded its financial target in the previous year so it would lower its target in 2025.
As a result, premium bonds are less likely to be competitive in the near future.
Returns eaten away by inflation
Inflation is currently at 3.8%, which is higher than the premium bond prize rate.
This means the value of your money is being eaten away in real terms.
If your savings don’t grow by more than inflation or at the same rate then you could effectively lose money as you won’t be able to buy as much as you could before.
That’s why it’s important to shop around to make sure you’re getting the best deal.
The top easy-access account on the market at the moment has an interest rate of 4.84%.
For someone with £10,000 in savings, opting for premium bonds would mean sacrificing £124 in interest.
But if they don’t win many prizes then their return could be even lower.
I’ve opened a top savings account with a rate of 4.73% – so now I can guarantee I’m winning every month.
Best savings accounts to get now
A top savings account can help you to get the best return on your money, so its value is not eaten away by inflation.
Always shop around to make sure you are getting the top rate on offer.
To do this you can use a comparison website, such as MoneyfactsCompare, to check the rates on offer at different banks and find the one that is best for you.
Always check the minimum deposit and any terms and conditions, including how many withdrawals you can make a year.
If you want a good return on your nest egg while still having access to your cash then an easy-access account could be a good option.
The best easy-access account currently on offer is from Kent Reliance and pays 4.33%.
You can open the account with just £1 and all interest is paid on the anniversary of the account.
Meanwhile, Harpenden Building Society pays 4.31% but you need to open the account with at least £100.
If you don’t need access to your money right away then you could earn even more interest with a fixed-rate account.
These accounts give you a boosted rate in exchange for locking your money away for a set period of time, which is usually between 12 months and two years.
You could earn 4.63% if you locked your money away in Aldermore’s Prosper saving account.
Or if you want to avoid paying tax on your nest egg then an Isa could be a good option.
Trading 212’s Isa pays 4.42% on balances of more than £1.
Meanwhile, Charter Savings Bank’s Isa pays 4.31% on balances of between £1 and £1.5million.
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