Many savers go for Premium Bonds within the hopes of gaining huge returns by way of prizes. Nonetheless, consultants have revealed that tens of millions have by no means received.
Premium Bonds is likely to be a waste of time for many savers (Picture: Getty)
New information from finance consultants AJ Bell has revealed that 14 million folks have by no means received a prize by having a Premium Bond account. These government-backed financial savings merchandise from NS&I permit savers to enter a tax-free prize draw and win as much as £1million. However 14.3 million holders have by no means received a prize. This accounts for nearly two-thirds of Premium Bond account holders. Moreover, the prize fund fee is being minimize from 3.6% to three.3% in April, with the percentages of profitable widening to 23,000 to 1 on the similar time.
“The attract of Premium Bonds resides within the potential for holders to win a prize as much as a most of £1 million, however a lot of these with cash within the accounts won’t ever win – or see a return on their cash in any respect. There are greater than 14 million premium bond holders but to win a prize, huge or small, making up almost two-thirds of all account holders,” mentioned Laura Suter, director of private finance at AJ Bell.
“Fewer than 1% of the prizes dished out between February 2025 and January 2026 went to these with accounts value lower than £1,000, in response to the info revealed by the NS&I. What’s extra, this cohort of Premium Bond holders made up round three-quarters of all who held the accounts in February 2025.”
She mentioned that these with smaller accounts are at a big drawback, and warned that they is likely to be higher off placing their cash right into a financial savings account with a beautiful rate of interest.
She added: “Even when taking a look at account sizes as much as £10,000, simply 6% of prizes fell into the palms of account holders in that bracket through the interval. Conversely, 53% of all prizes went to these with the utmost account worth of £50,000.
“Amongst non-winners, the typical Premium Bond account holding is £128.91, displaying that until you’re keen to fill the accounts with bigger sums of spare money, you’re unlikely to win in any respect.”
She warned that the “security” of those government-backed premium bonds doesn’t all the time equal success, and there are higher returns to be made elsewhere. She additionally warned that extra folks is likely to be drawn to a Premium Bonds account when the Money ISA restrict is slashed to £12,000 per 12 months subsequent 12 months, which might be the alternative of what the federal government needs from savers.
“Though in follow only a few folks may have been utilizing up their allowance above £12,000 a 12 months, analysis by AJ Bell final 12 months advised {that a} quarter of Money ISA savers would flip to Premium Bonds or different NS&I merchandise within the occasion of a minimize to the allowance, operating counter to the federal government’s said goal to get extra Brits investing.
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“Over the long run, investing has confirmed to beat money returns, and wanting profitable one of many most prizes, will undoubtedly stand a greater likelihood than Premium Bonds at serving to somebody to amass wealth. For instance, somebody who had invested the non-winning Premium Bonds account common of £128.91 into Constancy Index World 10 years in the past would have seen a return of 252.3% and a pot value a wholesome £454.19. Had they determined to take a position £1,000, that determine would have elevated to £3,523.32.”
She warned that, basically, the bulk of people that put their cash right into a Premium Binds account slightly than one thing like a Shares & Shares ISA are basically permitting their money to only “collect mud”.
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