Are Premium Bonds a scam?

helkin · 28 October 2008 at 4:49PM

Hi all - I was just wondering what your thoughts are on Permium Bonds.

In the late 80's, there were a number of articles in the press speculating that Premium Bonds were being used to pay the wages of special agents and spies.

Me, my family and a number of other people I have spoken to have quite a few savings in Premium Bonds yet none of us have ever won large sums of money.

I find it strange that, supposedly, they give out two £1 million jackpots every month, that's 24 new millionaires every year, yet noone has every heard stories about these people. A lot of people you speak to knows someone who knows someone who won the lottery but never anyone who won big with Premium Bonds. Also, there are regularly stories in magazines such as Take a Break where someone has won the lottery and then bad things have happened to them, but this is never the case for Premium Bond winners.

Has anyone ever met anyone or heard of anyone who has won a lot on Premium Bonds? Has anyone else heard these stories of Premium Bonds being used as a platform to pay of government agents?

I'd be interested to see what people's comments are on this.

lilac_lady · 28 October 2008 at 4:52PM

I've never won more than the odd £50 but I don't think they're a scam. I think a lot of people hold the maximum £30000 now (not me!) so the chances of a big win are slanted towards those who have a lot of bonds. I love it when someone with a few bonds wins a lot of money.

helkin · 28 October 2008 at 5:06PM

Well between me and other members of my family, we have about £120,000 yet we only ever win the occasional £50 or £100. Also, we've had that money in there for the past 10 years and we're still not winning anything big!

isofa · 28 October 2008 at 5:22PM

This is well covered and discussed in the main PB discussion thread here. Also there is a PB winners thread here.

And this thread needs to be merged with the main one.

There are some people that go public with local news stories that win big, most most would rather keep quiet for obvious reasons. Local newspapers and searches in Google will throw up some winners.

Perhaps people that play the lottery just can't handle the money and have to go screaming to the press, whereas perhaps people who buy PBs are a little more wise

They certainly aren't a scam, and if they are part of a wider portfolio they are fine, but if they are your only savings/investments, they offer a low return.

Don't forget the money is 100% safe and the returns are tax free too.

nicko33 · 28 October 2008 at 5:37PM

helkin wrote: »

Well between me and other members of my family, we have about £120,000 yet we only ever win the occasional £50 or £100. Also, we've had that money in there for the past 10 years and we're still not winning anything big!

I think it's only a 1 in 10 that you would have

using the figures from here
http://www.nsandi.com/products/pb/premiumbondstory.jsp
http://www.nsandi.com/products/pb/rates.jsp
1.5 million prizes per month (but only 7263 > £100, and only 183 > £5000)
27 billion bonds held

I calculate that £120,000 should have:
a 0.1% chance of winning nothing at all in any given month

a 96.8% chance of not winning a prize > £100 in any given month
(although you may still get multiple 50s and 100s)

a 2.1% chance of not getting a prize > £100 in 10 years
a 90.7% chance of not getting a prize > £5000 in 10 years

a 50.0% chance of not getting a prize > £5000 in 71 years
a 10.0% chance of not getting a prize > £5000 in 236 years

isofa · 28 October 2008 at 5:49PM

PS Forgot to add above, the high value winners list is published at the start of each month and is available here: http://www.nsandi.com/products/pb/winnerlist.jsp

It shows the area, the bond number, the holding and the amount won, including the jackpot winners.

To check if you've won a smaller prize each month, visit here: http://www.nsandi.com/products/pb/haveYouWon.jsp

Finally the MSE Premium Bond Probability Calculator is here: http://www.moneysavingexpert.com/savings/premium-bonds-calculator/

Gwhiz · 28 October 2008 at 6:28PM

Tinfoil hat alert!!!!!

Paying for spies!!! - what sort of a conspiracy nut are you!

Unlike the typical idiots winning the lottery and placing a big X in the "publicity please" box most PB winners will just get a nice cheque through the post (or a knock on the door) and keep their win secret.

iltisman · 28 October 2008 at 7:15PM

I heard about PBs being used for paying informers etc.I think a labour MP raised the issue. If you remember the cold war and the troubles in Ireland were ongoing so it would have been a useful vehicle for making payments.

stevetodd · 28 October 2008 at 7:36PM

I don't think they represent great value, but I think it would be unfair to call them a scam as they are transparent, what you see is exactly what you get.

Paul_Herring · 28 October 2008 at 8:41PM

helkin wrote: »

I find it strange that, supposedly, they give out two £1 million jackpots every month, that's 24 new millionaires every year, yet noone has every heard stories about these people. A lot of people you speak to knows someone who knows someone who won the lottery but never anyone who won big with Premium Bonds. Also, there are regularly stories in magazines such as Take a Break where someone has won the lottery and then bad things have happened to them, but this is never the case for Premium Bond winners.

Considering the comparative size of the prizes, I'd imagine that if anyone did win the first prize on the PB's they'd not be very newsworthy.

£1 million isn't really that much compared to the sums won on the National Lottery.

ballyblack · 28 October 2008 at 9:11PM

Premium Bonds!

Because of the poor chance of winning they are a government tax on fools

Are Premium Bonds a scam?

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