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premium bonds
guide to premium bonds
 Your guide to investing in premium bonds
Premium Bonds popularity has grown dramatically. Around 23m people hold Premium Bonds, which are issued by National Savings & Investments (NS&I).

Every month more than a million prize-winning numbers are chosen at random and two bond-holders pocket £1 million. Other prizes range from around a million at £50 to four at £100,000.

THE ODDS

The chance of winning the top prize with a single £1 bond are 24,500,000,000-1 (24.5 billion), but as the minimum £100 holding provides 100 chances, this cuts the odds to 245 million-1. Although NS&I say the chances of winning a prize with a single £1 bond are 24,000-1.

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IMPROVING YOUR CHANCES

The main way to increase your chances of a win is to buy more bonds. NS&I calculates that with the maximum £30,000 investment and average luck you should win 15 prizes a year.

Although there is no guarantee you'll win anything. Prizes are based on a rate of return, typically around 1% or 2% lower than the base rate. However, the best-paying deposit accounts usually offer far better gross rates of interest.

PICKING WINNERS

The numbers are generated by Ernie, Electronic Random Number Indicator Equipment. NS&I will send an agent in person to tell the top winner. Winners of smaller prizes are informed in writing.

HOW TO BUY PREMIUM BONDS

You buy them by debit card, call NS&I on 0500 007 007, or by complete an application form which are available from any Post Office branch. Or by requesting a form from NS&I by calling 0845 964 5000. The minimum investment is £100 but you can save £50 a month by paying direct debt.

PREMIUM BOND FACTS

• Premium Bonds were launched by Harold Macmillan on November 1, 1956.
• The first bond was bought by Sir Cuthbert Ackroyd, who later became Lord Mayor of London.
• The first draw took place on June 1, 1957, when the minimum investment was £1 and the top prize was £1,000.
• 23m people now hold £33bn in Premium Bonds.
• Today, the minimum investment is £100, and two £1m jackpots are given away each month.
• More Premium Bonds have been sold in the last five years than in the previous 45 years all together.
• All prizes are free of UK income tax and capital gains tax.
• There is at present £30m in unclaimed prizes.
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