NS&I Premium Bonds are no longer available at Post Office branches or on our website as of August 1, 2015. NS&I took this choice as part of a long-term goal to encourage clients to use its direct channels.
We continue to offer a wide selection of savings products at the Post Office to fit our customers’ needs, including ISAs, Instant Saver, and longer-term investments like our Fixed Rate Bonds, which are accessible in branch and online.
Is it possible to purchase Premium Bonds at my bank?
Every year, millions of Britons purchase Premium Bonds through the government-backed National Savings and Investments (NS&I).
Instead of paying interest, you’ll be entered into a monthly prize draw for a chance to win one of three tax-free rewards valued up to £1 million.
So, if you’re seeking for a regular income, this isn’t the account for you most people will only ever get a small percentage of what they contribute.
Premium Bonds are simple to obtain; all you have to do is apply on the NS&I website.
Alternatively, you can call 08085 007 007 or +44 1772 329880 to apply over the phone.
They can even be acquired for children under the age of 16, such as for a niece, nephew, or a friend’s child (more on this later).
Parents or guardians must be chosen to manage the child’s finances until they reach the age of 16.
For every £1 you invest in a Premium Bond, you’ll receive a unique bond number. They’ll be entered into the draw once you’ve had them for a month.
Have you already purchased some bonds? Check to see if you were a big winner in the most recent lottery.
I live outside the UK. Can I still buy Premium Bonds?
The first step is to determine whether you are permitted to hold Premium Bonds under local legislation. Premium Bonds may not be possible or practical to hold in the United States because to strict gaming and lottery legislation.
If you live in a country where they are legal, you must submit your initial application by mail. After you’ve set up your holding, you may sign up for NS&I’s online or phone service.
You can then manage your account online or over the phone (if you don’t mind the fees), which includes purchasing new bonds or cashing them in.
You also have the option of receiving rewards by BACS to a UK bank or building society account, or an NS&I Direct Saver or Investment Account (you’ll be advised of any changes via email), as well as receiving paperless papers.
Bonds can only be purchased with a personal debit card issued by a UK bank or building society online or over the phone. Prizes will be paid out in pound sterling wherever you are in the world.
Can I buy Premium Bonds for a child, even if they aren’t family?
Until the kid reaches the age of 16, the bonds are managed by the parent or guardian named on the application, regardless of who purchases them.
Until the child turns 16, the bond record, any prizes received, and payment for cashed in bonds will be forwarded to the selected individual.
Previously, only grandparents and great-grandparents were allowed to buy Premium Bonds for their grandchildren, but the regulations have been relaxed, and you can now buy them for any child, regardless of link.
Premium Bonds for youngsters can be purchased online at this NS&I gift website or by mail. You can also apply over the phone if you’re purchasing Premium Bonds for your own child.
If you want to apply by mail, go to this page, fill out the appropriate form, and mail it to:
What is the time frame for purchasing Premium Bonds?
What is the time frame for redeeming Premium Bonds? Unless you have chosen to cash in after the next draw, it can take up to three banking days for the money to reach your account, according to NS&I.
Is there anyone who has ever won a million dollars playing Premium Bonds?
Two Premium Bonds holders from South Gloucestershire and Surrey have won the £1 million jackpot in the October 2021 prize draw, bringing them a great summer windfall.
A woman from South Gloucestershire, who owns £49,994 in Premium Bonds, purchased the first winning bond, 433SN401366, in January 2021.
How can I set up a Premium Bonds standing order?
It’s all handled by your bank. Simply contact your bank and let them know how much you want to transfer and when you want it done. Most banks allow you to do this online or via their mobile banking app, but we also have a form that you can fill out and submit to them.
Keep in mind that if you want to cancel or change your standing order, you’ll need to contact your bank as well.
Is buying Premium Bonds in bulk better?
Q I have £27,000 in premium bonds that were issued in blocks of £2,000 and £1,000, and my winnings have been poor (£600 in the last three years).
Could you kindly tell me whether there is any evidence that holding one entire block rather than having them divided up as they are now would be better? I realize that if this is asked, it can be done, but I will forfeit one month of participation in the drawing.
A There are numerous theories. There is no evidence, however, that owning premium bonds in a single block increases your chances of winning. Otherwise, it would have become well known very quickly.
The R in ERNIE denotes a ‘random’ (Electronic Random Number Indicator Equipment) selection of the winning numbers, which has been the case since the inaugural draw in 1997. Each month, ERNIE is designed to select 2.5 million numbers, which are subsequently matched to 1 million eligible bonds (many of the numbers include bonds not yet sold or those which have been cashed in).
Since the introduction of the national lottery, premium bonds have grown in popularity to the point that total holdings are now about £25 billion, making the odds of winning the single £1 million top prize astronomical. The average payout is set at 3.2 percent net, but this covers all of the rewards given out, implying that the government is borrowing money at a low rate.
The fact that the earnings are tax-free on an investment where you can always get your money back is a major selling point. Unlike the lottery, which is a zero-sum game. You could sell your bonds and then buy them back to cover consecutive numbers. However, as you point out, this will cost you a month in the draw and will not increase your chances of winning. Don’t get too down on yourself. It appears that investors frequently receive nothing or very little for long periods of time before experiencing a run of excellent fortune.
Are there any disadvantages to Premium Bonds?
Since 1957, National Savings and Investments (NS&I) has marketed Premium Bonds. They are a risk-free option to save because NS&I is supported by HM Treasury and is part of the government.
Premium Bonds do not pay interest, but they do have a monthly prize draw with prizes ranging from £25 to £1 million.
Each bond costs £1 and includes a unique reference number that is used to enter the draw. That implies that for every pound you invest, you may be eligible to win a prize once a month (though it is highly unlikely).
Limitations
Premium Bonds are only available to those who are 16 years old or older. They can, however, be purchased on behalf of children, grandchildren, and great grandchildren and kept by an adult until the child reaches the age of sixteen.
Popularity
In 2008, premium bonds were a big issue. People were looking for a safer way to save during the financial crunch, and Premium Bonds, which are backed by the government, cannot lose their value. People were also drawn to the product because of the increased chance of winning more money.
There are presently 74 billion Premium Bonds in circulation, with approximately three million winning a prize each month.
Potential returns
Prizes range from £25 to £1 million, with lower-value awards being granted more frequently than higher-value prizes.
It’s vital to keep in mind that there’s no assurance that you’ll win anything. The monthly prize pool determines the “average rate of return,” which is now 1.4 percent.
It’s not as simple as assuming that if you buy Premium Bonds, you’ll get a 1.4 percent return. There are several factors that go into determining your exact chances of receiving prize money in that amount, but we estimate that you’ll need to invest roughly £20,000 in bonds to get close to the average return.
This calculator can be used to determine your chances of winning and potential profits.
Advantages and Disadvantages
Is it worthwhile to invest in Premium Bonds? It is entirely up to you to make that decision. Before making any decisions, it’s a good idea to consider all of the possibilities:
You will not see any rewards on your investments if your Bonds are not picked in the monthly prize draw.
Everyone enjoys the prospect of winning a large sum of money! The thrill of the prospect of winning £25 to £1 million for each Bond held is enough to entice some investors.
While the mathematics required to determine your chances of winning are complex, it is currently believed that the possibility of winning any prize is 1 in 24,500 for each individual Bond held.
Premium Bonds are backed by the government, hence there are no risks involved. In the worst-case situation, the bonds purchased are never selected as a reward, and the account balance remains unchanged.
Though the numerical value of your savings cannot be reduced unless you remove money, the real-term value can. Because the cost of living is rising, a stable investment value that does not rise will lose purchasing power over time.
Savings are always tax-free, which is one of the key benefits of bonds: higher-rate and even basic-rate taxpayers can invest substantial sums with no tax consequences.
Since the Personal Savings Allowance was introduced in 2016, most savers have seen no tax liability on their returns. That means savers can invest in vehicles that provide higher returns, and the lack of tax is no longer a distinguishing or compelling feature.
Premium Bonds are backed by the government’s promise to buy them back at the same price you paid for them. That means you can take your money out whenever you want and not worry about being penalized.
After the bonds have been held for a full prize cycle, they are entered into their first reward draw. This implies that Bonds purchased in March will be retained until the prize draw in May. Borrowing from your Premium Bonds could result in you missing out on a successful month.
What happens if you win a lot of money playing Premium Bonds?
It all depends on your financial circumstances and whether you prefer a prize draw to a traditional interest rate.
Many other bondholders, on the other hand, only receive tiny awards, and some do not receive anything at all.
We’ll compare the probability of winning Premium Bond awards to the lottery jackpot and savings accounts later in this post.
Your money is protected
Premium Bonds are offered by the government-owned National Savings and Investments (NS&I). This ensures that the money of clients is completely safe.
In contrast, bank and building society savings accounts are regulated by the Financial Services Compensation Scheme in the event that the provider goes bankrupt. The Financial Services Compensation Scheme (FSCS) only covers deposits up to £85,000 per individual and per institution.
However, because the maximum amount you can invest in Premium Bonds is £50,000, you might get the same level of security by putting that money in a high-street bank account.
They are tax-free
Because most of us have a personal savings allowance, I argue it is a benefit for certain people (PSA).
- Basic-rate taxpayers can earn interest on their savings of up to £1,000 per year without paying any tax.
- The PSA does not assist additional-rate taxpayers (those who pay the highest tax rate of 45 percent).
Because 95% of people do not pay any tax on their savings interest due to the allowance, Premium Bonds would provide no meaningful tax benefit.
It’s nevertheless comforting to know that if you do win a large sum of money, it will be tax-free.
You can reinvest
When you win with Premium Bonds, you get a form of compound interest effect.
You can have the money reinvested instead of taking cash (unless you already have the maximum £50,000).
Your winnings can be used to purchase more bonds. As a result, every £1 you invest buys a new bond, each of which has a unique number that is put into a monthly prize draw.
An easy access option
If you’re seeking for a temporary home for your money and will need access to it quickly, Premium Bonds could be a good option.
You might not want to put your money in a fixed-term savings account (where you lock your money up to get a greater interest rate) or invest in the stock market, which is more risky.
Premium Bonds can be withdrawn at any moment through the NS&I website (although it can take up to eight working days for the money to arrive in your bank account).
What are the disadvantages of Premium Bonds?
Premium Bonds are, in this sense, a sort of gambling, analogous to purchasing National Lottery tickets, rather than a savings or investment account.
It’s important to note, though, that just the “interest” is a gamble. The money you put into Premium Bonds is kept safe and secure.
If you win on Premium Bonds, do you get notified?
If you win, we’ll notify you through text or email. When you sign into your online account, you’ll be given the ability to adjust your prize options.