House deposit partly in Premium Bonds: keep in there or move it to another account?

WagathaChristie

Hi all,

Looking to buy a house/flat in the next year, and some of my deposit is in Premium Bonds, in which I have the full £50k holding. I’ve had the Premium Bonds for about 10 years now, with the full holding, and generally won something most months.

I’m just wondering if I should put the PBs in another account instead, to get a guaranteed return each month (which I won’t necessarily get with PBs)? I have the rest of my deposit in a couple of other accounts (both cash, with decent-ish returns (4-4.5%), and I’m a basic rate taxpayer.

Thanks!

Albermarle

As you will need the money to be easily available, the alternative to PB's would be easy access savings accounts.
Currently you can get around 4.5% to 5%  with this type of account, as long as you avoid the big banks.
Best Easy Access Savings Accounts | Up to 4.86% Dec 2024

From January the prize rate for PB's will drop to 3.5% to 4 % ( depending on how you calculate it)

Depending on your income etc you may well have to pay tax on some of the interest in a savings account, whilst PB's are tax free. Plus with a savings account you should limit the amount to £85K for each provider, as that is the compensation limit.

NameUnavailable

Albermarle said:

Plus with a savings account you should limit the amount to £85K for each provider, as that is the compensation limit.

Just to add, that's £85K for the provider group - as many banks are now part of wider groups it's important to ensure that you don't deposit £85K in two accounts run by the same group as your protection will only cover one of them.

peterhjohnson

Be aware that the PB website doesn't always work for withdrawals so don't rely on being able to get your money out at the last minute!