Premium Bonds

What is a premium bond?

Premium bonds are a kind of investment that are run by the UK government, or more correctly, the UK Treasury. Rather than getting interest on your savings, each investor in premium bonds has the opportunity to win tax-free prizes every month. Remember though, premium bonds are a gamble; whilst the potential for a million pound prize is there, you may win nothing at all.

What are my chances of winning the premium bonds?

If you have the maximum holding of £30,000 in premium bonds, the average rate you should get is 3.6%. Having premium bonds is like having a bank account. However, each £1 you put in holding in premium bonds has a 24,000 to one chance of being the million-pound winner.

How much am I allowed to invest in premium bonds?

You are allowed to invest 30,000 pounds, per person, in this issue of premium bonds.

Are premium bonds risk free?

Premium bonds are risk free because they're backed by the UK Treasury. Premium bonds are 100% secure. However, premium bonds might also end-up return free. If you never win a prize you've had no return on your money at all.

What are the advantages of holding premium bonds?

The main advantage of holding premium bonds is that you might be the big prize winner and that every premium bond you hold is entered into the draw every single month. So the more premium bonds you hold and the longer you hold them, the more chances you have of winning those prizes.

What are the disadvantages of holding premium bonds?

The disadvantage of holding premium bonds is that your capital is locked up. You can't gain access to it. If you withdraw from premium bonds, you withdraw from the chance to win any prizes. Another disadvantage is that inflation is always at work. If you just hold the same amount of money in your premium bonds, when you draw the money out some years later, you won't be able to buy as many things with it; inflation will have taken hold.