Two-thirds of Premium Bonds holders have not won a penny from its monthly prize draw, an investment firm reveals.
Over 14 million account holders paying into the National Savings and Investments (NS&I) accounts have not scooped up any of its range of prizes, according to a freedom of information request by AJ Bell.
Every month, two out of the 22-and-a-half million people with a bond can bag the main £1,000,000 jackpot.
Every £1 bond you purchase gets you an equal chance of a prize, so the more bonds you have, the better your chance of winning.
August’s Premium Bonds draw saw someone from Outer London with £24,155 in the product pick up the prize, while someone from Kent with just £100 in bonds collected £100,000.
The cash prizes each month are divided into three bands of higher, medium and lower value. The higher-value bands can win the million jackpot or other amounts ranging between £5,000 and £100,000.
There were 18,256 winners of the medium-value prizes of £1,000 and over two million winners picked up £100 in August.
That’s out of a total of 22-and-a-half million people who are Premium Bonds holders, which adds up to a £126bn pot, according to NS&I.
NS&I tells customers that it has a variable prize fund rate of 4.4% and the firm does not guarantee you will win should you invest in a bond.
However, once you do win, the chances are that you will again, as 80% of the winners between June 2023 and May 2024 have won multiple times. That’s over five million account holders who have done so.
Last month, the Government savings arm announced it had not reached its fundraising targets, meaning the value of the bonds might reduce.
‘Might be better considering other options’
The benefit of Premium Bonds is that they’re free from UK income tax and capital gains tax, but Laura Suter, director of personal finance at AJ Bell, thinks investors might find better value elsewhere.
Suter said: “Although the overall average holding of Premium Bond holders sits at a more modest £5,185, given there’s a pretty decent chance that amount will not win a prize, savers might be better off considering other options with their cash savings.
“For example, if they took more risk and invested the money instead, putting that £5,185 in the Fidelity Index World global tracker fund 10 years ago, they’d be sitting on a pot worth £16,689 today. Of course, the lure of Premium Bonds is that you might win the big £1m prize, but these figures show that it’s very unlikely if you have a small amount saved in the bonds.”
Suter added: “What these figures make clear in this extended period of higher interest rates on cash and a cost-of-living crisis is that savers will often be better off exploring the various inflation-beating cash rates on offer elsewhere in the market rather than leaving it to chance in a Premium Bonds account.”
