Can I workout an approximate interest rate on premium bonds?

[Deleted User]

Hi All,

I posted about my savings in another thread recently but had some more questions for this. So I have all my savings (£50k) currently sat in Premium Bonds and at the end of each month before PayDay, I have put the remaining amount of money left over that month from my current account into the PB Account to 'top it up'. Is there a way to find out in percentage wise how much I've saved/won in winnings so as to compare with any other savings/fixed-rate savings accounts?

I've just turned 30 and am currently, because of reaching the PB £50k limit, putting my remaining money before payday into my Barclays Instant ISA account, which I know pays diddly squat. I currently have £2k sat here. Just wondering if there's better places for this. I may need easy access to it within the next 12 months minimum to get onto the property ladder. Albeit not sure with what is currently going on with the market at the moment...

Thanks,

Malthusian

The relevant percentage to compare with is the prize fund rate, which is currently 2.20%pa. From that you can knock off a tenth of a percentage point or two on the basis that you almost certainly won't win the top prizes, which take a disproportionate share of the payout (as that's the point of a lottery). 
How much you have won in the past is irrelevant. Past performance is not a guide to the future.

[Deleted User]

Hi,

here's the MSE GADGET.

Albermarle

You can just look through one of the comparison sites. All providers mentioned are covered by the £85K compensation scheme, even if you have never heard of them.
Compare The Best UK Savings Accounts | moneyfacts.co.uk
Savings accounts: 2.5% easy access or up to 4.4% fixed (moneysavingexpert.com)

A said you can work on about 2 % for PB's as an average over the year, if you have the full £50K.
You can easily check your prize history on the N S & I website.

Malthusian

frugalmacdugal said:

Hi,

here's the MSE GADGET.

Has that been updated with this week's prize fund increase? It indicates that a win with "average (median) luck" nets only 1%pa. If true I need to revise my comment that "you need to knock off a tenth of a percentage point or two". If it was still based on a 1.4% prize rate it wouldn't be as startling. 
Unfortunately it doesn't confirm what prize fund rate it's based on. (But it does say that the tool is re-run once a month.)

[Deleted User]

Hi,

on the Compare to Savings tab, it says,

Will you beat it with your Premium Bonds?

At the current 1.4% Premium Bonds interest rate, you'd expect to win £14. The probability you would actually win less than this is 61.3%

EthicsGradient

If you use the "How lucky am I" section of the MSE calculator, it has a link in the result "Click to see how the Official Premium Bonds interest rate (which determines the odds) has changed over time" - this shows a flat line of about 1.5% (can't be more accurate than that) over a 2 year March-Feb period, so that is presumably the old 1.4% prize rate. 

if you plug the maximum amount and period (5 years) in to "How lucky am I", and say you win £3,250, it says 49.5% of people win more than that - so that's an effective median rate of about 1.3% - slightly below the prize rate, as you'd expect, to allow for the bit that goes to big prizes that never really affect this calculation.

One oddity is that the odds of the smaller prizes - the only ones you stand much of a chance getting - is changing in "shape" - the number of prizes from before and after:

Lower value (90% of prize fund)	£100	38,137	728,737
	£50	38,137	728,737
	£25	4,774,798	3,484,716

so the number of £25 prizes will actually go down about 1,300,000, but the £50 and £100 go up 700,000 each. So you'll hardly win any more often, but the chances of a larger win have gone up.