Q. As interest rates on deposit accounts are so low, I am tempted to simply buy Premium Bonds instead.
However, a colleague insists they are not worth it as he has held £1,000 worth for years and has never won anything!
You also hear stories like ‘you only win if you constantly sell and buy bonds’.
Do you think it’s worth a punt?
A. We hear different stories probably much like you, both positive and negative.
Your concern about new bonds winning is one of the myths that NS&I have recently commented on to publicise that they have created 250 millionaires since 1956. They say:
Myth 1 – You have to have £30,000 invested to win the jackpot. Jackpot winners have had different amounts invested over the years – one winner of the £1 million jackpot only had £17 in Premium Bonds! It is true though, that the more Bonds you hold, the better your chances of winning.
Myth 2 – Only new Bonds win prizes. Each £1 Bond has an equal chance of winning, regardless of when or where it was bought. Several winners in June’s jackpot draw were bought in the early years that Premium Bonds were on sale. For example, in this month’s draw a prize of £1,000 was won with a Bond bought in 1970. Bonds bought more recently may seem to win more often because there are more new Bonds than old.
Myth 3 – Old Bonds are left out of the draw. Winning numbers are generated randomly and then matched against eligible Bond numbers afterwards – numbers aren’t entered into or stored in ERNIE so there’s no way that any Bonds can be left out of the draw.
Even Bonds bought as far back as 1956 may still be eligible for the draw.
Myth 4 – Only Bonds from the South East win prizes.
If it seems that more prizes are won by holders in the South East, that’s because there are more Bonds held there compared with the rest of the UK.
NS&I said that people may be missing out on prizes because of mislaying them or not informing NS&I if they have changed address rather than any other reason.
Looking at your chance of winning anything, the odds quoted are 24,000 to 1, with the annual prize fund interest rate at 1.50% paying out.
Every month, as well as the £1 million jackpot, you can win anything from £25 to £100,000 for each bond number you hold. All prizes are tax-free.
So keeping a proportion of your cash in Premium Bonds is perhaps not a bad idea, and you never know, you may win a big prize.
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