A significant number of Premium Bonds investors – approximately six out of ten – have yet to receive any winnings.
Cashing in on the Randomness: Unraveling Britain's Premium Bond Obsession
Looks like more than 22 million blighty residents are holding onto Premium Bonds, dreaming of striking it big with a cool £1 million prize.
These bad boys are a hit with the Brits for the sheer excitement of the lottery-style draw happening every month, offering two lucky savers the chance to win not one, but two £1 million jackpots!
Not to mention, any winnings from the draw are absolutely exempt from any tax, which tickles the fancy of savers with some hefty pots.
But here's a fun facts: two out of every three current Premium Bond enthusiasts - that's approximately 14.4 million - have never been lucky enough to snag a prize, according to a Freedom of Information request by stockbroker AJ Bell.
This mind-numbing stat has been calculated based on prize data tracing back to February 1994, the same year the first £1 million prize was introduced to the monthly prize draw by National Savings and Investments.
It also incorporates new Premium Bond holders who had just acquired their bonds and weren't yet eligible for the draw. Remember, you gotta wait a full month for your bonds to be eligible for the draw of fate.
There's a staggering £127.7 billion stashed away in Premium Bonds, as per AJ Bell, with the average holding tipping the scale at a modest £5,406. It's likely that millions of Premium Bond enthusiasts are stashing away just a few hundred quid - or even less.
Interestingly, the average holding for the 5.1 million Premium Bond holders who bagged a prize within the last 12 months is a whopping £23,397 – almost quadruple the average holding.
Four out of every five winners who won a prize in the last 12 months nabbed a prize more than once during that period.
The number of £50 and £100 prizes handed out has surged since 2022, and they now represent a higher proportion of winning prizes compared to the lowest £25 prize.
The vast majority of Premium Bond prizes were worth £100 or less in 2024. Meanwhile, the number of higher value prizes has waned. In the April draw, for instance, there were four fewer £100,000 prizes compared to the February draw, taking the tally down to 78.
Simultaneously, there were 157 £50,000 prizes on offer, a decline from 164 in the February draw, with 15 fewer £25,000 prizes and 39 fewer £10,000 ones.
#### For More Insights...Lee Boyce, senior pensions and savings expert at AJ Bell, sheds some light on the matter: 'While there has been a recent shift to most winners receiving prizes of £50 or £100, instead of the lowest £25 on offer, the vast majority of winning prizes in 2024 were still worth £100 or less.'
The prize fund rate for Premium Bonds - the average return a Premium Bonds saver would see in a year - currently comes in at 3.8%. The odds of winning a prize in the draw hover around 22,000 to one.
The more you invest, the higher your chances of winning a monthly prize.
This doesn't mean that you're guaranteed to see anything close to a 3.8% return on your savings. Many savers might find themselves going home empty-handed after a given year.
Instead of offering a fixed interest rate, Premium Bonds holders stand a chance to win monthly prizes that range from £25 all the way up to £1 million.
But here's the catch: even the average holding might not win a prize, so it's worthwhile to consider keeping your money in a high-interest easy-access account.
National Savings and Investments (NS&I) has dialed back the prize fund rate from 4.4% to 4.15% in December 2020, then again to 4% in January 2021 before the most recent cut to 3.8%.
If a saver were to park the average holding of £5,406 in an easy-access account paying the Premium Bonds prize fund of 3.8%, they could earn a tidy sum of £616 over the course of a year.
However, if they kept it in the best easy-access account with a rate of 4.76%, they could bank an even more appealing £669 over the same period.
- The average Brit holding Premium Bonds hopes to win a prize, as two £1 million jackpots are drawn monthly, exempt from tax.
- Despite the excitement, only 1 out of every 3 Premium Bond holders has claimed a prize, a statistic calculated since February 1994.
- The total amount stashed away in Premium Bonds stands at £127.7 billion, with the average holding at £5,406.
- Lee Boyce, a pensions and savings expert from AJ Bell, highlights that the majority of winning prizes in 2024 were still worth £100 or less.
- By investing more, savers can increase their chances of winning monthly prizes, but higher returns might be found in high-interest easy-access accounts.
