Premium Bonds - Are They Worth Keeping

1st March 2025

Premium Bonds can be a worthwhile investment for some people, but it depends on your financial goals and risk tolerance. Here are some key points to consider:

The prize rate for Premium Bonds has recently dropped to 4% for January's draw and is set to drop again to 3.8% in April. This means that the effective interest rate you might earn from Premium Bonds is lower compared to some other savings accounts.

Premium Bonds operate on a monthly prize draw system, where each £1 bond has an equal chance of winning. The more bonds you hold, the higher your chances of winning. However, the odds of winning a significant prize are quite low. For example, the odds of winning the £1 million jackpot are approximately 1 in 60 billion.

One of the advantages of Premium Bonds is that you can withdraw your money at any time without penalty. This makes them a flexible option for those who want easy access to their savings.

Comparison with Other Savings Accounts: While Premium Bonds offer the excitement of potentially winning a large prize, other savings accounts may offer more predictable returns. For instance, some fixed savings accounts currently offer higher interest rates than the prize rate of Premium Bonds.

Ultimately, whether Premium Bonds are worth holding depends on your personal preferences. If you enjoy the thrill of the prize draw and are comfortable with the possibility of earning less than other savings options, Premium Bonds might be a good fit for you. However, if you prefer a more predictable return on your savings, you might want to consider other options.

You can hold up to £50,000 worth of Premium Bonds per person2. This means you can purchase and hold bonds up to this limit, and any winnings that would take you over this amount will be paid out to you instead of being reinvested.

Read more at https://www.nsandi.com/files/asset/pdf/premium-bonds-brochure.pdf