Do Premium Bonds make sense?

BML

I received a message from Barclays Bank yesterday telling me that they were now offerin 0.1% increase on savings.  Does it make sense to take that money and buy Premium Bonds?

Albermarle

The headline 'interest rate ' for PB's is 1.4%. This means the return for someone with average luck with the prizes.
However the figure is skewed by the two million Pound prizes each month . So the real return is around 1.2% + an infinitesimally small chance of winning a Million Pounds.
Alternatively if you can tie your money up for a year , or more, you can earn >1.4%
https://moneyfacts.co.uk/

ColdIron

It will be different for everyone. If you are a higher rate taxpayer with a spare £50,000 then possibly. If you only have £1,000 and pay no tax probably not

Read about them here

https://www.moneysavingexpert.com/savings/premium-bonds/

Or play with the calculator

https://www.moneysavingexpert.com/savings/premium-bonds-calculator/

eskbanker

As rates have declined elsewhere, the market-leading easy access accounts are now in the same territory as the typical return on PBs, so PBs are more competitive than before, especially with the tax-free status of the winnings (relevant for some) and the small possibility of decent-sized wins.

It's a long time since Barclays savings accounts were competitive though!

Stubod

With the ongoing reduction in rates generally I think PB's do make sense particularly if you can afford to "max out"....

blue_max_3

No don't! I don't want a lesser chance of winning!

AnotherJoe

Depends on your circumstances. For the first time,  this tax year I've bought PB's because it will avoid paying tax on interest,  and i cant open a cash ISA as i already used my allowance in a S&S one. But I know I'm very much in a minority. FWIW I'm a basic rate taxpayer.

ColdIron

I didn't think I'd ever say it but as I pay tax on my savings, for the first time in the 8 years since I last held them I'm going to buy them at the end of the month for the July draw. As they paused the planned changes recently they may hold up for longer than easy access accounts

tommyedinburgh

We love Premium Bonds in our household, we have had much greater than average luck and my wife is Irish and loves a cheeky wee lotto, euromillions, bet and when back in Ireland lots of GAA club lottos.

I think the attraction of being the elusive million pound winner plays a part for us, it gives us an a bit of excitement to check the app etc and leads to a monthly conversation about what we'd do if we won etc - all part of the dream I suppose.

BML

When I look at what Barclays and most other banks charge on Credit cards and their other money making schemes I resent they pathetic amount they pay in interest to money I have in their care. Bearing in mind I’m risk averse can anyone suggest where to place £5,000?

ColdIron

Start here

https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/