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Three quarters of Premium Bonds holders have never won a prize

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Nearly 16 million Premium Bond holders are yet to win a single prize from their savings bonds, a new investigation has revealed.

That’s the equivalent of around three quarters of all savers with money in Premium Bonds, according to the results of a Freedom of Information request from the Telegraph.

The nation’s favourite saving account

Premium Bonds are enormously popular with savers in the UK. According to National Savings & Investments (NS&I), which provides the accounts, there are currently around 21.4 million people across the country with money in Premium Bonds.

This is all the more impressive when you consider that Premium Bonds are such an unusual form of savings account, as they don’t actually pay a penny in interest.

Instead, each bond is entered into a monthly prize draw. If your bond is chosen, then you’ll win a cash prize, which ranges from £25 all the way up to two monthly winners pocketing a cool £1m.

It’s also worth highlighting that another big selling point of Premium Bonds is NS&I itself. As a government-backed bank, every single penny that savers put into NS&I accounts ‒ including Premium Bonds ‒ is guaranteed by the government.

That makes it all the more appealing compared to regular banks, where savers’ cash is still protected by the Financial Services Compensation Scheme, though that protection is capped at £85,000 per financial institution. 

What are my chances of winning?

NS&I has only been keeping records of individual winners since 2007, though since then 12 bond holders have pocketed the £1m top prize on their first ever draw. What’s more, a single bondholder has won 348 prizes over that period, totaling £10,500.

NS&I sets an annual prize rate, in order to establish how many prizes are on offer in total for each prize draw. This is currently set at 1%, which means savers have a 34,500 to one chance of winning a prize for each £1 they hold in bonds.

The prize rate was cut last year, alongside the interest rates offered on NS&I’s more traditional savings accounts.

The more money you have saved in bonds, the better your chances are of landing a cash prize. According to the Freedom of Information response, the majority of the 5.5 million savers who have won prizes since 2007 are likely to have invested tens of thousands of pounds.

For example, of the 186 savers who won £5,000 or more last month, more than a third (39%) had the maximum £50,000 invested. By contrast, just 13 of those winners had less than £10,000 saved in Premium Bonds.

Getting a return on your cash

Even with the long odds of winning a prize, Premium Bonds have also proven attractive to savers given the tiny interest rates being paid on regular savings accounts at the moment. Indeed, there are now no savings accounts that deliver an inflation-beating return.

A host of other savings providers have now launched their own savings accounts which offer savers the chance of winning cash prizes, most recently NatWest which is promising top prizes of £1,000.

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