NS&I premium bonds- cheating?

roopoo337

Hi!
I'm trying to get my head round the NS&I premium bonds & the prizes. Anyone know what is to stop me from putting in £2k on payday, waiting until the draw for that month, and withdrawing it and putting it into savings/spending on rent etc, then doing the same the next month? Presumably that's 80x times more likely to win me something than if I just put £25 a month in. I know obviously if I left it in there, and let it cumulate I'd have more chances, but I'd rather just keep it in savings, and just enter the prize draw for nowt?
Thanks!

clowning

The bonds have to held for a full month before they become eligible for a draw. So bought 30th August - become entered in a draw 1st October 

masonic

The only way I'm aware of to enter the prize draw for nowt is to use money borrowed at 0% interest.

Sarahspangles

roopoo337 said:

Hi!
I'm trying to get my head round the NS&I premium bonds & the prizes. Anyone know what is to stop me from putting in £2k on payday, waiting until the draw for that month, and withdrawing it and putting it into savings/spending on rent etc, then doing the same the next month? Presumably that's 80x times more likely to win me something than if I just put £25 a month in. I know obviously if I left it in there, and let it cumulate I'd have more chances, but I'd rather just keep it in savings, and just enter the prize draw for nowt?
Thanks!

Bonds have to be invested for a full month before they’re eligible for a draw. If you buy them late in the month using other savings then you maximise the interest you get on those savings, then miss a month, then after that it’s the luck of the draw.

They’re not really a short term product. As you don’t pay tax on premium bond winnings they’re attractive to people who have already exceeded their personal savings allowance of £1000 allowance, or £500 for higher rate tax payers.  So an average return of 4.4% would be equivalent to a savings rate of 5.5% for someone with other savings interest that is using their PSA. If you’re “unlucky” though it could be less.

njkmr

I believe the real return averages about 2.4%.
That is also what i have been getting with max holdings.
And yes you have to have them in for a full calendar month before they are eligible in the next draw.

masonic

njkmr said:

I believe the real return averages about 2.4%.
That is also what i have been getting with max holdings.
And yes you have to have them in for a full calendar month before they are eligible in the next draw.

On a full holding, you'd be unlucky to get a return that low unless it was over a short holding period. The median return rises to about 85% of the headline rate by around the 1 year mark, and creeps up to 90% if held for several years.

Sarahspangles

masonic said:

njkmr said:

I believe the real return averages about 2.4%.
That is also what i have been getting with max holdings.
And yes you have to have them in for a full calendar month before they are eligible in the next draw.

On a full holding, you'd be unlucky to get a return that low unless it was over a short holding period. The median return rises to about 85% of the headline rate by around the 1 year mark, and creeps up to 90% if held for several years.

My OH has been unlucky then, he has had 2% return over the last twelve draws on full holding. He would pay tax if this return was savings interest, but that makes the comparator a 2.5% one month notice savings account and there are better options out there.

Of course one good month could change all that but we’re too rational to think ‘He must be due a win”!

masonic

Sarahspangles said:

masonic said:

njkmr said:

I believe the real return averages about 2.4%.
That is also what i have been getting with max holdings.
And yes you have to have them in for a full calendar month before they are eligible in the next draw.

On a full holding, you'd be unlucky to get a return that low unless it was over a short holding period. The median return rises to about 85% of the headline rate by around the 1 year mark, and creeps up to 90% if held for several years.

My OH has been unlucky then, he has had 2% return over the last twelve draws on full holding. He would pay tax if this return was savings interest, but that makes the comparator a 2.5% one month notice savings account and there are better options out there.

Of course one good month could change all that but we’re too rational to think ‘He must be due a win”!

My return was north of 5% when I sold up and moved to normal savings a year or two ago, quitting while I was ahead. I would not use PB today with savings rates as they are. I bought my earlier holding when they were a much better deal compared with savings rates.

OldScientist

Sarahspangles said:

masonic said:

njkmr said:

I believe the real return averages about 2.4%.
That is also what i have been getting with max holdings.
And yes you have to have them in for a full calendar month before they are eligible in the next draw.

On a full holding, you'd be unlucky to get a return that low unless it was over a short holding period. The median return rises to about 85% of the headline rate by around the 1 year mark, and creeps up to 90% if held for several years.

My OH has been unlucky then, he has had 2% return over the last twelve draws on full holding. He would pay tax if this return was savings interest, but that makes the comparator a 2.5% one month notice savings account and there are better options out there.

Of course one good month could change all that but we’re too rational to think ‘He must be due a win”!

According to the calculator at https://www.moneysavingexpert.com/savings/premium-bonds-calculator/ there is a 0.8% chance of winning £1000 (i.e., 2% of £50k) or less over the course of a year (that ignores the slight changes in prize rates since September 2023). So, pretty unlucky, but not outrageously so!

Sarahspangles

OldScientist said:

Sarahspangles said:

masonic said:

njkmr said:

I believe the real return averages about 2.4%.
That is also what i have been getting with max holdings.
And yes you have to have them in for a full calendar month before they are eligible in the next draw.

On a full holding, you'd be unlucky to get a return that low unless it was over a short holding period. The median return rises to about 85% of the headline rate by around the 1 year mark, and creeps up to 90% if held for several years.

My OH has been unlucky then, he has had 2% return over the last twelve draws on full holding. He would pay tax if this return was savings interest, but that makes the comparator a 2.5% one month notice savings account and there are better options out there.

Of course one good month could change all that but we’re too rational to think ‘He must be due a win”!

According to the calculator at https://www.moneysavingexpert.com/savings/premium-bonds-calculator/ there is a 0.8% chance of winning £1000 (i.e., 2% of £50k) or less over the course of a year (that ignores the slight changes in prize rates since September 2023). So, pretty unlucky, but not outrageously so!

He’s got his health, and me, so the universe balances out!

6022tivo

They are easy to buy, tax free and a bit of fun. Short term is fine, just invest at the end of a month, so they are in a month to get picked. 

They do make 2 millionaires a Month, and you can get your money back very quickly when needed.