Savings account or Premium Bonds?

JELCOAT13

Premium bonds and savings...What actually is better?
After me and my partner have just mortgaged our first home I have just started to save again after saving our deposit up. I am wanting to know would it be better putting money in a savings account that can be accessed or just using a premium bonds account?

george4064

The Premium Bonds vs Saving Accounts argument is well covered in this article: https://www.moneysavingexpert.com/savings/premium-bonds/

Have a read and if you have any questions then feel free to post them here

Eccles04

Personally I recently gave up trying to get an inflation busting interest rate and decided to buy some bank shares instead. Nearly all of them are paying dividends which are far better than any interest rate they might give you and if you go to the right places it will only cost you a small fee plus some stamp duty to buy a bunch of shares.

Eco_Miser

Eccles04 wrote: »

Personally I recently gave up trying to get an inflation busting interest rate and decided to buy some bank shares instead. Nearly all of them are paying dividends which are far better than any interest rate they might give you and if you go to the right places it will only cost you a small fee plus some stamp duty to buy a bunch of shares.

That's fine until you find the bank you invested in is the new Northern Rock or Bradford & Bingley.

Dividends are higher than deposit rates to compensate for the risk that you may not get all (or any) of your money back.

MrMorgan

Why not both? thats what im doing.. spread the investment - money in Premium bonds to keep the "chance" and the "wins" and then also paying bits into a Marcus savings account.

Bring both accounts values up thats what i say

Brilley

Probably only worth doing PB's if you can max out?...that way you should get around the average of 1.4% ('ish), which is about equal to a no frills Marcus savings account....

El_Torro

Premium Bonds pay roughly 1.26% annually, tax free. The headline rate of 1.4% includes the two £1 million wins every month, which as you can appreciate is incredibly unlikely for you to win.

You can find savings accounts that perform a bit better than this, especially if you don’t pay tax on your interest anyway.

The bonus of Premium Bonds is the thrill of the e-mail you get when you do win a prize. Sure, there’s a 97% chance that the prize will be worth £25 but for a short time you can dream it’ll be more.

Up to you to decide how much that thrill is worth to you

xylophone

Have you already saved your "emergency fund"?