Premium Bonds sparked the first conversation that my husband and I ever had about money, more than 20 years ago.
He was fond of playing the lottery every week and I suggested that he played the Premium Bonds instead.
He would still get the chance to win big tax-free prizes each month but could always get his initial investment back. So we both bought small £100 stakes in Premium Bonds for the fun of it.
Like most people owning these products, we were drawn by the lure of the £1 million jackpot and the chance to win small prizes, too.
Even winning the smallest prize of £25 would have felt good. But, with such a small stake, neither of us won a penny in more than 10 years. It became a running joke between us.
Around 22.7 million people hold Premium Bonds, with £127.7 billion sitting in these accounts at the end of 2024.
Time to switch: Moira O’Neill (pictured with husband Memet) currently holds £50,000 – in Premium Bonds but she’s planning to sell them and put the money into a savings account
However, a Freedom of Information (FOI) request obtained by AJ Bell’s Dodl investing app reveals that nearly two-thirds (63 per cent) of Premium Bond holders, equivalent to just below 14.4 million people, have never won a prize.
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That’s a pretty depressing statistic. Many people will have been holding Premium Bonds for decades, perhaps receiving them as gifts when they were young, which means they may have missed out on significant returns in a higher-paying cash account or by investing. They will also have lost out to inflation.
The average overall holding in Premium Bonds is £5,406. However, AJ Bell found the average holding for the 5.1 million Premium Bond holders who won in the last 12 months sits at £23,397, with 80 per cent of those winners winning more than once during that period.
Certainly, my experience in recent years of holding larger amounts in Premium Bonds has been good.
In summer 2022, I decided that it would be a good idea to hold our family’s cash emergency fund in Premium Bonds.
The overall prize fund rate – which is the average return that holders get on their money each year – had moved up a bit and I knew it was a very safe place to hold my money because NS&I is backed by the Government.
Plus, I still fancied my chances of winning a big prize after all those years of holding my small stake.
So, I raised my holding to £50,000 – the maximum amount allowed, thinking surely there would be a better chance of winning prizes with a larger stake?
Since July 2022, I’ve won a total of £3,570 in prizes – made up of £25, £50 and £100 wins on individual bonds.
My best month was January this year, when I won a total of £300 on five of my bonds. It has been fun sharing the monthly news with my husband – using the NS&I app’s ‘reveal results’ feature.
There were six months when I didn’t win prizes at all. But my overall returns always seemed close to the prize fund rate, so that seemed fair – I was having average luck. Now, the glow has worn off and I’m planning to sell all my bonds.
I first started mulling a new approach to our family’s emergency fund in February when NS&I announced it would cut the Premium Bonds prize rate from 4 per cent to 3.8 per cent from April, although the odds will stay at 22,000 to one.
One option was to move to NS&I’s cash Isa but that only pays 3.5 per cent.
Luck of the draw: In February NS&I announced it would cut the Premium Bond prize rate from 4% to 3.8% from April, although the odds will stay at 22,000 to 1
Trading 212 has caught my eye with its easy-access cash Isa deal paying 4.83 per cent. The rate is for new clients and includes a bonus of 0.73 per cent for the first 12 months.
I like that the interest is paid daily – it’s a little financial pick-me-up that’s not so exciting as a Premium Bonds win but will keep me motivated.
The other advantage of an easy-access cash Isa is being able to get at your money. With Premium Bonds, I always feel reluctant to dip into them until after the next potential prize day. But, with our eldest now at university, I want more flexibility.
Charlene Young, senior pensions and savings expert at AJ Bell, says: ‘The market is still flush with cash accounts (including tax-free Isas) paying rates higher than the Premium Bonds estimated prize fund rate of 3.8 per cent, meaning holders might benefit from shopping around to make their cash work harder.’
My husband Memet still thinks it’s worth holding out for a life-changing sum and he’s going to keep his £100 stake in Premium Bonds.
He says: ‘I’ve kept my £100 all these years just for the chance of winning big. I know the odds are against me but £100 is only the cost of a meal out.
‘When I heard that in March someone with £100 had won the jackpot, I thought “That could have been me!” It’s a pipe dream.’
In 2024, a bond holder scooped £100,000 from a £100 holding in the first month they were eligible for the draw. While in March 2025, someone in Cleveland won the £1 million jackpot with a £100 holding purchased in May 2023.
But Young says: ‘The chance of winning any of the top prizes (from £5,000 all the way up to £1 million) remains minuscule.’
The other reasons to ditch Premium Bonds are also mounting.
Guaranteed returns: There are several cash accounts currently available (including tax-free ISAs) paying rates Premium Bond estimated prize fund rate of 3.8%
Since 2014, there have been two £1 million jackpots each month. But £1 million can only buy a fraction of what it would stretch to when it was introduced in April 2014.
In order to have kept pace with inflation, Hargreaves Lansdown calculates it would need to have almost tripled, to £2,734,618. Plus the odds of winning £1 million have been lengthening.
During 2024, more than five billion more bonds were bought, which Hargreaves Lansdown analysts calculate means your odds of winning fell from around one in 61 billion to close to one in 64 billion. No wonder people compare it to the chance of being struck by lightning.
Millions more £50 and £100 prizes have been dished out since 2022, and they now make up a larger proportion of winning prizes than the lowest £25 prize.
Although the number of higher-value prizes has also seen a jump, the vast majority of Premium Bond prizes were worth £100 or less in 2024, meaning the chance of winning the top prizes is still very small.
So my husband can keep his pipe dream of a life-changing sum. But I won’t be joining him. I’ll still ask him every month if he’s won something.
At the very least, his £100 stake is a monthly reminder to check in with one another to talk about money which is so important to do as a couple.
Read More: I’m ditching my Premium Bonds to get a better rate. But my husband’s holding on to his –