Premium Bonds

Elljay_2

I have done a search and haven't been able to find anything on these, so sorry if it has been posted before. I have about £30,000 to save and I was wondering if it would be better to just leave it in my high interest account (5.2%) or take a chance and buy some premium bonds. I have heard that there is a one in 30,000 chance of winning a prize and that it is tax free. (Even though I am a non tax payer). Has anyone had any good/bad experiences with premium bonds. I haven't heard ANYONE say they have had a win....maybe I speak to the wrong people?????

Reaper

This comes up regularly but I never had much luck with the MSE search so I'm not surprised you couldn't find it.

If you were to invest the full £30,000 you could expect one or two wins every month. This will be reasonably regular because the prizes are biased towards the smaller amounts, i.e. there are very few large prizes and lots of smaller ones.

If my figures are up to date the payout averages 2.8%. That compares poorly with your 5.2%, but do remember it is tax free making it more attractive to a higher rate tax payer. It still doesn't match that 5.2% though, so it's really something to do if you want a bit of fun, and you can always hope for the big win.

EDIT: Just re-read your post and noticed you are a non-tax payer. A such I'd say don't invest in Premium Bonds as you are getting the full 5.2% gross interest.

jimclark1967

With £30,000 and average luck you could win around 15 prizes a year. Most prizes are £50 but there's always the smaller chance of winning one of the really big ones.

So you need to decide whether you'd rather have a reasonable chance of £750 a year with the chance of winning a really big prize on Premium Bonds or, if you stick it in a 5% savings account, a guaranteed £1200+ after tax.

If it was me, I'd do a bit of both. Make sure you use your ISA allowance for this year and next with £6000 of it, then maybe £4000 in a decent instant access account paying over 5% and take a chance with the remaining £20,000 on the Premium bonds. Obviously your situation will be different so you need to decide what's best for you.

For what it's worth, I've had £500 in bonds for 15 months and have won a single £50 prize so currently slightly better than a savings account

Dave79_2

Just bought some so I have info in front of me:

odds 24,000 to 1
interest rate is 3.2%

I know one person who won £100,000 and one who got £10,000.

I have just upped my holding to £500 so fingers crossed.

JasonW_2

So, the premium bonds do gather interest then? I never knew that. So, say if I had £500 worth of bonds, I assume the interest is I get some new bonds in my name every so often? If this is correct, then how often does this happen? And I also assume that if I close the account, I get all the money back inclusing the interest and of course any winnings?

JW

Dave79_2

No, the interest is what is used to pay the prizes out. That is how they generate the prize money.

JasonW_2

Ahhh right, I get it now. Does make sense, well as long as I win

Im going to invest in some shortly. Wouldnt want all my savings in there just incase I dont win, and would have missed out on interest from my ING account, but this is an exciting way to save and hopefully win big.

JW

Fastflys

We have held £30,000 worth of Premium Bonds for a number of years [£10,000 me - £10,000 wife - £10,000 son]. They form part of our investment portfolio.

Like the Lottery, Premium Bonds are a gamble. The only good reason for investing in them is the slim hope of winning a substantial tax free cash prize.

Unlike the Lottery where your “stake” is lost, Premium Bonds can be cashed in at any time and your “stake” returned to you.

So what have we won in recent years:

2002 = £450

2003 = £900

2004 = £700

2005 = £150 to date

At no time ever have our Premium Bond prize winnings exceeded the annual net interest earned had we deposited the same in a safe savings account such as ING.

chinagirl

Can anybody tell me how to find out if you have won on the Premium Bonds? I have married and changed my name, also have moved several times since my parents bought me them as a baby, so how do they inform you of your winnings?
I looked on the internet, and came up with a firm that ask you to ring a premium rate number at considerable cost (£1.50/ minute, average call lasting 6 mins). I hope I am sitting on a cool fortune, which would come in very handy indeed.

Here hoping!

chinagirl

Dave79 wrote:

Just bought some so I have info in front of me:

odds 24,000 to 1
interest rate is 3.2%

I know one person who won £100,000 and one who got £10,000.

I have just upped my holding to £500 so fingers crossed.

Perhaps you can tell me how they found out they had won!

ta, chinagirl.x

zx2011

You can use NS&I's tracing service.

Download the form at http://www.nationalsavings.co.uk/help/tracemysavings.jsp