The public are expected to deposit millions of pounds into premium bonds in the coming weeks as the new limit becomes £50,000, up from £40,000. The National Savings & Investment bonds, that are backed by the government, have had their investment limits relaxed by £10,000.
The low interest rates offered by banks and building societies alike have led to customers becoming disenfranchised and instead are choosing to invest in premium bonds. The bonds also offer the chance to win prizes of anywhere between £25 and £1 million - all of which is tax-free.
A huge £6 billion has already been put into these bonds since June last year. Around that time the investment limit was raised £10,000 from its previous £30,000 limit. That increase marked the first time the limit had risen for 10 years.
At the present moment in time, the public have roughly £53 billion put away in bonds. This represents investments from around 23 million savers. These savings are higher than the total level of savings with Yorkshire Building Society who are the second biggest company of its kind in the UK.
There are currently around 250,000 people who have invested the maximum limit of £40,000.
The NS&I's bonds work on the basis of paying out prices to those who have invested money and kept it invested for over a month. These bonds are much more likely to pay out that things such as the National Lottery. The lottery has odds of one in 14 million, these bonds have odds of one in 26,000.
Unlike savings accounts that are held with banks or building societies, these bonds do not pay out interest. The only way that will receive a return on your investment is when you win a prize in the draw. The total interest rate that these prizes equate to is 1.35% every year - this is taken based on the total amount of money invested.
This "interest rate" can change at any time, with the last peak being 3.4% back before the financial crisis. This 1.35% rate would pay out £675 from the new limit of £50,000 if it were to be saved in a traditional bank.
In the last month the £60 million has been paid out in just 2.07 million prizes, over 2 million of these prizes were £15. The 168 payouts ranged between £1 million and £5,000; over 1,000 people won £1,000, over 3,500 were paid £500.
If you decide that you would like to remove your saving at any point, then you can sell your stake for its original value and you will receive your money back within 8 working days.
If you are over the age of 16, then you are eligible to buy premium bonds. The smallest amount that you can invest is £100. The invested money is protected by the treasury so you won't be at risk of losing it. All winnings are tax-free.
Make the most of your money by comparing savings accounts with MoneyExpert.
FAQs
Your money is protected
The FSCS only protects deposits up to £85,000 per person, per institution. However, the maximum you can put into Premium Bonds is £50,000, so if you opted to put that in a high street bank account instead, you would effectively get the same protection.
Is it worth putting 50000 into Premium Bonds? ›
Furthermore, average winnings are around 1% or even less, which can still see your cash being beaten by inflation. The same research found that holding £50,000, the maximum amount of bonds, would give a 0.9% return with average luck. So the average return on 50k of premium bonds is £450 per year.
How many people hold $50,000 in Premium Bonds? ›
The consistent winners are the 1.16 million people who have the maximum £50,000. They hold almost half of all premium bonds and, at current odds of 21,000:1, can expect a monthly stream of tax-free prizes: two a month and three almost every other month, 28 or 29 a year totaling £1,860.
How many 100k prizes are in Premium Bonds? ›
But another winner, based in South West Wales, purchased the winning bonds in March 1990, 34 years ago - proving that good things also come to those who wait. There were 86 £100,000 winners in this month's Premium Bonds prize draw. The £100,000 prize is the second biggest after the coveted £1million jackpot.
What is the 10000 limit on bonds? ›
The limit is per person, so if you're married then each spouse is allowed to purchase $10,000 in I bonds (plus the paper bonds if they have a tax return). You can also purchase up to $10,000 in I Bonds for your children, but they must be used for the child, possibly as a college savings tool.
Can you have more than 10000 in I bonds? ›
Is there a maximum amount I can buy? In a calendar year, one Social Security Number or one Employer Identification Number may buy: up to $10,000 in electronic I bonds, and. up to $5,000 in paper I bonds (with your tax refund)
Is it worth putting 10000 into Premium Bonds? ›
MoneySavingExpert's bond calculator estimates that somebody who invested £10,000 in Premium Bonds and had average luck would win £350 over a year, a 3.5 per cent rate of return.
What are the chances of winning 1 million on Premium Bonds? ›
What are Premium Bonds?
| Prize amount | Number per month | Odds of winning AT LEAST this amount per £25 of bonds in one month (1) |
|---|
| £1 million | 2 | 1 in 2,468,879,591 |
| £100,000 | 87 | 1 in 56,755,846 |
| £50,000 | 172 | 1 in 19,064,706 |
| £25,000 | 346 | 1 in 8,161,586 |
8 more rowsApr 2, 2024
What are the prizes on Premium Bonds? Every month, two holders will win £1 million. The rest of the prizes are worked out depending on the rest of that month's balance, after the two £1 million prizes.
Is it possible to never win on Premium Bonds? ›
The Bonds are tax free and you never lose your original stake. Two-thirds of the 13.4 million savers who haven't won a prize in the past 19 years hold from £1 to £9. And the average sum held by savers who haven't won is £98, NS&I says. NS&I increased the prize rate from 4 pc to 4.65 pc in September.
In fact, the oldest bond to ever scoop the £1million jackpot was bought in 1959 — and was picked out as a winner by ERNIE 45 years later in 2004. The winner, from Newham in London, had a holding of just £17.
Do you pay tax on Premium Bonds? ›
Premium bonds are free of capital gains tax, stamp duty and income tax and do not count towards your personal savings allowance. They are not free of inheritance tax. Thank you. You must be signed in to post in this forum.
Is it worth having $100 in premium bonds? ›
It describes the 'mean' average, indicating that for every £100 paid into bonds, on average £4.40 a year is paid out – yet in practice this is impossible, as the smallest prize is £25. In fact, if 20 people each had £100 invested for a year, for one to win £25+, the remaining 19 would have to win nothing.
How can I increase my chances of winning premium bonds? ›
Buy bonds regularly: If you buy premium bonds regularly, you will increase your chances of winning a prize. This is because each time you buy a bond, you are entered into the monthly prize draw. 6. Check your bonds regularly: Make sure to check your premium bonds regularly to see if you have won a prize.
How long do premium bond winnings last? ›
Hop in the checker tool and enter the 10-, 9-, or 8-digit holder number to pull up the value of the bond. This will also tell you if you've got any unclaimed prizes! Premium bond winnings never expire, so even you won back in the 1950s, the money is still good.
Can I hold more than 50000 in premium bonds? ›
Premium Bonds
You can invest from £25 up to £50,000 in total. Premium Bonds don't pay any interest. Instead your Bonds enter a monthly prize draw for a chance to win tax-free prizes.
Do I pay tax on premium bonds? ›
Premium bonds are free of capital gains tax, stamp duty and income tax and do not count towards your personal savings allowance. They are not free of inheritance tax. Thank you. You must be signed in to post in this forum.
Do old premium bonds ever win? ›
In fact, the oldest bond to ever scoop the £1million jackpot was bought in 1959 — and was picked out as a winner by ERNIE 45 years later in 2004. The winner, from Newham in London, had a holding of just £17.
What happens if I have too many premium bonds? ›
Premium Bond investors that are found to have too many Bonds in their name will have the extra cashed in and refunded — minus any prize money. If the prize money won is worth more than the extra bonds held, NS&I will ask for the cash back.
