Premium Bonds are offered by National Savings & Investments and promise a tax-free payout if you win. But, of course, there’s no guarantee you will win. The odds of winning are 1 in 30,000, or the equivalent interest .
The basics of Premium Bonds
You can buy Premium Bonds online or by phone. You can find out more information about Premium Bonds on the National Savings & Investments website.
SAVVY TIP: If you’re a new NS&I customer, you have to print the registration form off and post it to NS&I. If you’re an existing NS&I customer but you’ve never used the website or phone service before, you have to register first and get an NS&I number (and a temporary password if you’ve applied by phone).
– The minimum amount you can pay in is £100 and the maximum is £50,000. The money you pay in buys £1 bonds.
– Your bonds are put into the draw the month after you buy them.
SAVVY TIP: You can buy £50 of Premium Bonds at a time if you set up a standing order. There’s information on how to buy Premium Bonds with a standing order on the National Savings’ website.
– You have to be aged 16 or over to take out a Premium Bond, but parents and grandparents can take them out for their children or grandchildren. There’s more information about how you can buy a Premium Bond for a child or grandchild on NS&I’s website.
– Your capital (the original amount you pay in) is secure as it is backed by the UK government.
– If you win a prize, the payout is tax free. The smallest prize is £25 and the biggest is £1 million. There are two £1 million prizes.
SAVVY TIP: Because you may be able to win a prize, you aren’t paid interest on the amount you save in a Premium Bond. However, the ‘equivalent’ interest rate, for someone with average luck (whatever that is!) is 1.15% tax free.
– Premium Bonds don’t run for a specific term, so you can cash them in at any time, without any penalty.
Your chances of winning
NS&I uses ‘ERNIE’ to pick Premium Bond numbers at random.
– The chances of a £1 bond winning a prize are 30,000 to 1. It decreased from 26,000 to 1 to 30,000 on June 1st 2016.
SAVVY TIP: The website Moneysavingexpert has a Premium Bond prize winning calculator, which you can use to work out how much you might win.
Claiming your prize
Don’t forget to claim your prize. It sounds obvious, but there’s currently millions of pounds in unclaimed Premium Bond prizes.
– You can find out if you’ve won a prize by checking the Premium Bond prize checker.
– You can get your prize money paid into your bank account or use your winnings to buy more Premium Bonds. The account has to be a UK one. You can find out more about how to get prizes paid direct into your bank account on the National Savings website.
– You will be informed that you’ve won a prize by letter or email.
SAVVY TIP: You can find out how to change your address details, so you can be informed if you’ve won a prize, on the NS&I website.
Photo credit: NS&I
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