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Are Premium Bonds a scam?
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# 1
helkin
Old 28-10-2008, 3:49 PM
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Default Are Premium Bonds a scam?

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.
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# 2
lilac_lady
Old 28-10-2008, 3:52 PM
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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.
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# 3
helkin
Old 28-10-2008, 4:06 PM
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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!
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# 4
isofa
Old 28-10-2008, 4:22 PM
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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.

Last edited by isofa; 28-10-2008 at 4:30 PM. Reason: added links for PB threads
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# 5
nicko33
Old 28-10-2008, 4:37 PM
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Quote:
Originally Posted by helkin View Post
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

Last edited by nicko33; 28-10-2008 at 4:39 PM.
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# 6
isofa
Old 28-10-2008, 4:49 PM
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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/sav...ds-calculator/
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# 7
Gwhiz
Old 28-10-2008, 5:28 PM
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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.
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# 8
iltisman
Old 28-10-2008, 6:15 PM
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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.
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# 9
stevetodd
Old 28-10-2008, 6:36 PM
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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.
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# 10
Paul_Herring
Old 28-10-2008, 7:41 PM
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Quote:
Originally Posted by helkin View Post
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.
Conjugating the verb 'to be":
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# 11
ballyblack
Old 28-10-2008, 8:11 PM
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Premium Bonds!

Because of the poor chance of winning they are a government tax on fools
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# 12
Count_Dante
Old 28-10-2008, 8:31 PM
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Quote:
Originally Posted by ballyblack View Post
Premium Bonds!

Because of the poor chance of winning they are a government tax on fools
A tax on fools - a truly progressive tax.
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# 13
bjorn_again
Old 28-10-2008, 9:14 PM
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Quote:
Originally Posted by isofa View Post
T

Don't forget the money is 100% safe and the returns are tax free too.
Premium Bonds is another "under the matress" job.
What is tax free on zero return? Had £10k in PMs for more than 4 years now and probably "won" £300 in fifties. I feel that they may well be a scam.
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# 14
bjorn_again
Old 28-10-2008, 9:18 PM
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Quote:
Originally Posted by stevetodd View Post
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.
How do we know they are transparent? How can we check that we are not being fed bull.?
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# 15
LesU
Old 28-10-2008, 9:24 PM
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I can't speak for other holders, but I have about £3500 in PB's and my wife has about £4000. It's only in small wins, but both of us got a return of about 8% over last year, which is not bad tax-free, esp. as the wife pays 40% tax.
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# 16
Gwhiz
Old 28-10-2008, 9:40 PM
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Quote:
Originally Posted by bjorn_again View Post
Premium Bonds is another "under the matress" job.
What is tax free on zero return? Had £10k in PMs for more than 4 years now and probably "won" £300 in fifties. I feel that they may well be a scam.
I've got £30K and I'm averaging over £100 per month tax free. Not a bad return at all!
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# 17
isofa
Old 28-10-2008, 9:50 PM
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Quote:
Originally Posted by bjorn_again View Post
Premium Bonds is another "under the matress" job.
What is tax free on zero return? Had £10k in PMs for more than 4 years now and probably "won" £300 in fifties. I feel that they may well be a scam.
You cannot describe them as a scam, They are utterly transparent. All the details are there to read.
If you argue "how do we know this is true", "they must be lying", you can argue this about literally anything, any bank/BS account.
They are even very open when the "rates" drop as they have done recently.

If you feel this about your PBs, why don't you withdraw them? No-one is forcing you to keep them there. Why anyone would hold them and complain is a mystery.

Because you haven't won much, doesn't mean others haven't. I know people who have won decent amounts, but nothing up the top of the jackpot scale.

For me personally, I've beaten high rate interest instant access savings for the past two years with my "wins" so I'm quite happy. I've had PBs for years, sometimes they return well, other times not, but there is always a chance of winning a larger prize, which you'll never have in a bank account.

As part of a balanced portfolio they are an option, and for me a useful one. For a high rate tax payer, they are even more interesting.

Anyway this should be on the main discussion not a new thread - search for the topic and contribute first, or start a new thread where there isn't a discussion :rolleyes:

The only tax on the stupid IMO is the lottery.

Last edited by isofa; 28-10-2008 at 9:54 PM.
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# 18
chopperharris
Old 28-10-2008, 10:49 PM
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so these spies , how much are they holding?

Is ernie given the virtual screws on his thumbdrives and told what numbers to pick?

Does the govt kidnap his family and say do as we tell you or your daughterbaord gets it?

Do they blackmail him with jpegs of his extra marital affairs with the teasmaid and nights out at a laptop dancing club?
Have you tried turning it off and on again?
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# 19
Trollfever
Old 28-10-2008, 11:07 PM
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I am a fan.

If you look on Teletext you will see that one of this months million pound winners had a £400 holding bought in Oct 2006!
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# 20
DX-SFX
Old 28-10-2008, 11:40 PM
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Quote:
Originally Posted by helkin View Post
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.
The name's Bond! Premium Bond!

:rolleyes:

I blame the "X Files" for the all the dumb conspiracy theorists.

Just to rub salt in the wound, my other half has premium bonds and she wins a jammy number of times way above what she should average. Of course her good fortune must be balanced by someone else's bad fortune. Based on the poor return (see elsewhere in the forum) I prefer to place my money elsewhere.
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