Online Premium Bond account

ValiantSon

PeacefulWaters wrote: »

But 1.4% is the value of the prize fund.

For easy access no hoops saving it's decent.

You can't just magically magic away a jackpot that they pay.

Yes, I understand what the 1.4% figure pertains to.

For "easy access no hoops saving" there are easy access savings accounts that actually pay real interest - guaranteed!

Yes, they do pay a jackpot, but your chances of winning it are infinitesimally small.

For the large majority of people, premium bonds are a poor option.

ValiantSon

EachPenny wrote: »

The winnings are also free of tax, so quite useful if you are a taxpayer and have used up all your allowances

Which is one of the criteria that might suggest it is worth an individual considering using premium bonds, but even then it is by no means an obvious choice.

firestone

There is nothing people like more then having a flutter so i think most people who have bought bonds know the 1.4% is an estimate but have decided that with rates so low they will take a chance unlike the Lottery you don't lose your money and can be cashed in quick.Would guess most people have savings before buying in the first place and if they have enough to buy the max they will probably cover the lost interest.I have a retired relative who has in his words 40 ish in bonds and gets 2 or 3 £25 prizes most months and a couple of £500 that i know about- this over the last 5 years after taking out with pension lump sum
I would also guess if the members of my family are anything to go by that some people who have bonds don't like stocks & shares and are using them as an alternative and also with savings accounts not instead of

ValiantSon

firestone wrote: »

There is nothing people like more then having a flutter so i think most people who have bought bonds know the 1.4% is an estimate but have decided that with rates so low they will take a chance unlike the Lottery you don't lose your money and can be cashed in quick.Would guess most people have savings before buying in the first place and if they have enough to buy the max they will probably cover the lost interest.I have a retired relative who has in his words 40 ish in bonds and gets 2 or 3 £25 prizes most months and a couple of £500 that i know about- this over the last 5 years after taking out with pension lump sum
I would also guess if the members of my family are anything to go by that some people who have bonds don't like stocks & shares and are using them as an alternative and also with savings accounts not instead of

None of this counters the fact that premium bonds are, for the majority of people, a poor choice. Just because people like doing something doesn't mean it is a good choice.

I know that I am not going to persuade people that they are a poor choice, but it doesn't mean that they aren't.

Each to their own. I prefer to actually get a return on my money.

eskbanker

firestone wrote: »

There is nothing people like more then having a flutter

Speak for yourself! There are quite a few things I like more than gambling* but this is a family site....



* Obviously I mean the likes of:

Raindrops on roses and whiskers on kittens,
bright copper kettles and warm woolen mittens,
brown paper packages tied up with strings,
these are a few of my favorite things.

Cream colored ponies and crisp apple strudels,
door bells and sleigh bells and schnitzel with noodles.
Wild geese that fly with the moon on their wings.
these are a few of my favorite things.

Girls in white dresses with blue satin sashes,
snowflakes that stay on my nose and eyelashes,
silver white winters that melt into springs,
these are a few of my favorite things.

When the dog bites, when the bee stings,
when I'm feeling sad,
I simply remember my favorite things,
and then I don't feel so bad.

PeacefulWaters

ValiantSon wrote: »

For the large majority of people, premium bonds are a poor option.

For the large majority they're several times better than is obtainable from your main bank.

Even stripping out the jackpot they compare favourably in the current climate.

ValiantSon

PeacefulWaters wrote: »

For the large majority they're several times better than is obtainable from your main bank.

Even stripping out the jackpot they compare favourably in the current climate.

That's just nonsense. I'm sorry, I was being polite before, but you are just talking rubbish.

PeacefulWaters

ValiantSon wrote: »

That's just nonsense. I'm sorry, I was being polite before, but you are just talking rubbish.

Well back it up with some numbers then.

And to confirm again, I am talking about easy access savings accounts as a comparator, not direct debit muddling current accounts.

Best three easy access buys pay between 1.22% and 1.35%. PBs pay 1.40% via prizes.

Big provider easy access accounts:

Halifax 0.35%.
Lloyds 0.35%.
Santander 0.60%.
HSBC 0.45%.
Barclays 0.25%.

Those numbers are several times smaller than 1.40%.

For "easy access no hoops saving" there are easy access savings accounts that actually pay real interest - guaranteed!

I'll take my chances with the smooth curve of probability and 1.40% over and above 0.35% from an online savings account.

ValiantSon

PeacefulWaters wrote: »

Well back it up with some numbers then.

And to confirm again, I am talking about easy access savings accounts as a comparator, not direct debit muddling current accounts.

Best three easy access buys pay between 1.22% and 1.35%. PBs pay 1.40% via prizes.

Big provider easy access accounts:

Halifax 0.35%.
Lloyds 0.35%.
Santander 0.60%.
HSBC 0.45%.
Barclays 0.25%.

Those numbers are several times smaller than 1.40%.

I'll take my chances with the smooth curve of probability and 1.40% over and above 0.35% from an online savings account.

Oh dear.

Premium bonds do not pay 1.4% interest! They pay no interest at all. You have the possibility of winning prizes, but you could get nothing.

With the maximum £50,000 in premium bonds and average luck you could expect to win £500 in a year, which is 1% and, of course, half of all people will, by definition, have worse luck. In a savings account paying 1.35% (available from an FSCS protected bank) you would be guaranteed a return of £675.

You cannot exclude FSCS protected banks because they are not household names. Your money is just as safe with them. However, if you want to play that silly game then Tesco will pay 1.3% interest, which would be £650.

The probability is that you will get a smaller return from premium bonds.

I'll say it again, you are talking utter rubbish.

If you want to put your money in premium bonds then that is your own foolish choice, but it is not a better option for the majority of people than using savings accounts.

PeacefulWaters

ValiantSon wrote: »

Premium bonds do not pay 1.4% interest! They pay no interest at all. You have the possibility of winning prizes, but you could get nothing.

Any reasonable probability distribution curve will see a prize pot paying out pretty close to that 1.40% number, notwithstanding a range either side. For a £50k saver a prize or more a month is more likely than none.

With the maximum £50,000 in premium bonds and average luck you could expect to win £500 in a year, which is 1% and, of course, half of all people will, by definition, have worse luck. In a savings account paying 1.35% (available from an FSCS protected bank) you would be guaranteed a return of £675.

I believe the average return without jackpot is still well over your 1% claim. Ready to be shown wrong. I make it 1.36%. Give me 1.36% variable plus a chance of £1m rather than 1.30% cash in hand.

You cannot exclude FSCS protected banks because they are not household names. Your money is just as safe with them. However, if you want to play that silly game then Tesco will pay 1.3% interest, which would be £650.

The reality is most people open their savings account with a known brand paying a poor rate.

The probability is that you will get a smaller return from premium bonds.

Based on 1.3% being less than 1.4%?

I'll say it again, you are talking utter rubbish.

I've given my reasons clearly. Surely you can do better than repeat a nonsensical insult.

If you want to put your money in premium bonds then that is your own foolish choice, but it is not a better option for the majority of people than using savings accounts.

Even when "most" use terrible savings accounts?