‘I’ve had Premium Bonds for 6 years and not won a penny’ | Personal Finance | Finance
Premium bonds are issued by NS&I, a government backed savings bank – they are not savings products in that they do not pay interest and people who hold premium bonds are instead entered into a monthly draw where they get the chance to win a £1 million jackpot.
Premium bonds also pay out smaller prizes from £25 but many savers are now questioning whether their money would be better elsewhere; in April NS&I cut the premium bond prize rate from 4% to 3.80% having already reduced the win rate from 4.15% to 4% in January.
One saver who has held premium bonds for six years claims not to have won anything, and he took to social media site X to find out whether his money would be better elsewhere.
@JamesAnder30564 posted on X asking NS&I for advice. He posted: ‘@nsandihelp I’ve been a member for six years – and not won ANYTHING once , only got 5 thousand pound in – what are the chances of winning in general – coz this money would be better off earning me interest elsewhere ?’
ns&ihelp on X replied: ‘Good morning, James. We’ll need to ask you a few more questions first. Please send us a DM and we’d be happy to help. Cal’
There were no answers given on X but the i has reported that a growing number of over-60s are holding premium bonds.
It’s Freedom of Information request found the number had grown by more than 900,000 since before the Covid pandemic – a jump of more than 20 per cent.
It said there were now 5,698,169 over-60s holding premium bonds, compared to 4,794,674 in 2019.
Calculations from Quilter reveal that James might want to consider investing his money elsewhere.
Quilter said that if that if £3,600 was put into a stocks and shares junior ISA in 2011 it would currently be worth nearly £10,000 compared to just £4,000 had the money had been invested in premium bonds during the same period.
Quilter said that premium bonds have risen in popularity over the past year with a record £23.8bn being invested into NS&I savings products, such as premium bonds, in the wake of the pandemic.
The maximum junior ISA subscription limit in 2011 was £3,600 and calculations show that if the full amount was put into a stocks and shares JISA and invested in the IA UK All Company index it would be worth £6,918 today and if invested in the IA Global index worth £9,580 over the 10 years assuming charges of 0.5%.
Meanwhile, the same amount invested in premium bonds over the same period would be worth just £4,025 assuming no large cash prize was won and using the historical prize fund rates which give an average return of 1.25%.
Similarly, had the money been put in a cash JISA with an average interest rate of 4.3% then you would have £5,258. However, current average JISA rates have dropped significantly since 2011 and are now around 2%.
