Premium bonds 1.8% rate of interest

geoffken

Not sure if this has been posted but 1.8% !!!!!!!.
About time they removed the second £1,000,000 prize and gave smaller ones .
a 36 ,000 to 1 chance means I will probably be moving my £30,000 to somewhere a lot better than 1.8%

roadrunner46

geoffken wrote: »

Not sure if this has been posted but 1.8% !!!!!!!.
About time they removed the second £1,000,000 prize and gave smaller ones .
a 36 ,000 to 1 chance means I will probably be moving my £30,000 to somewhere a lot better than 1.8%

I quite agree. I only had £1,000 worth until I got my KE funds repaid, I then bought another £29.000 worth in October. I'm leaving them in until the December drawn and then I'm withdrawing them. Personally I think the top prize should be £250,000 and loads more smaller prizes. Anyway, with one chance in 36,000 they can stick them where the sun don't shine.

dunstonh

Premium bonds 1.8% rate of interest

Premium bonds dont pay interest. The rate is the average you get paid on winning. i know that is what you meant but some reading may not.

As has been said many times before, premium bonds are unsuitable for most people.

geoffken

Thanks for semantics but I am sure that most holders recognise "rate of interest" as being prize fund calculations.
With Inflation now at 4/5% this 1.8% is no longer a reasonable investment tax free. A def no no although the chance of winning is what keeps people buying lottery tickets which are an even bigger waste of money.

roadrunner46

dunstonh wrote: »

Premium bonds dont pay interest. The rate is the average you get paid on winning.

I think you will find that 1.8% is the rate of interest paid on the total pool of bonds held. The prizes are then paid out of this interest.

Aegis

geoffken wrote: »

Not sure if this has been posted but 1.8% !!!!!!!.
About time they removed the second £1,000,000 prize and gave smaller ones .
a 36 ,000 to 1 chance means I will probably be moving my £30,000 to somewhere a lot better than 1.8%

Most people won't even get close to the 1.8% either. The two top prizes skew the distribution for everyone else, and as I've pointed out a few times before this means that the median average would be a much better indication of expected winnings than the arithmetic mean in this case. Unfortunately I don't think I've seen the median winnings value published for Premium Bonds, however I wouldn't be surprised if it was down at 1.5% or below now.

baby_boomer

An idiot Finance presenter on BBC breakfast said it was news to him that the Premium Bond prize fund was linked to interest rates.

Higher rate taxpayers have piled into PBs over the years, but now they "only" have to get 3% elsewhere to match the 1.8%.

Financial Mail link - It's the lowest return since they began in 1956 :eek:

msfender

Ok, the pot has to shrink in relation to interest rates but the distribution of prizes now is frankly bizarre.

http://www.investorschronicle.co.uk/InvestmentGuides/SavingsProducts/article/20081120/67ba2b94-b63d-11dd-9511-00144f2af8e8/Odds-worsen-for-Premium-Bonds.jsp

Jonbvn

Unless you were a higher rate tax-payer PB's have always been quite poor. With their current rate of 1.8% they are now shockingly poor.

Etccarmageddon

the rate is poor as you can achieve a significantly better rate with a building society if you shop around.

bresker

There has been a flood of money into Premium Bonds since the banking crisis. I wouldn't be surprised if the government is trying to pressure investors to put their money out of NS and back into the baanking system to restore confidence.

I've got a £1000 of premium bonds, am none too pleased by this. But I'll keep them there - I'm a gambler by nature & there's less temptation to spend my cash if I have it invested somewhere. I'm not going to become a millionaire by stick £1000 in a building society.