Premium Bonds may be incredibly popular – but 14m have never won a penny in prize money

Only a third of people who hold Premium Bonds have ever won a single prize, out of the 22 million people who entrust their savings or spare money to the scheme run by by NS&I.

Recent data shows more than 14m of holders, or 63 per cent, have never won, despite there being regular handouts of £50 and £100, with the possibility of also winning £1m.

Many people use Premium Bonds effectively as a savings account, as tax is not payable on winnings and the prizes on offer can give returns better than interest rates in traditional savings accounts.

NS&I quote a prize fund rate of 3.8 per cent - however, there is no guarantee of winning and cash left in them does not earn interest in the traditional sense, meaning its value will lower over time due to inflation.

A freedom of information (FOI) request, from the investor app Dodl, shows that while the total number of prizes handed out worth more than the lowest amount of £25 has “increased significantly since 2022”, data suggests those with bigger holdings are increasingly benefitting from the bigger prizes.

In total, more than £127m is held in Premium Bonds, where rules state £50,000 is the maximum any one account may hold.

They say the odds of winning are one in 22,000 for each £1 a holder has in the monthly draw and note “the more Bonds you buy, the more chances you’ll have to win.”

But the AJ Bell-owned app further revealed what while the average overall holding was around £5,400, the average holding for the 5.1m accounts who won a prize over the past 12 months was well over £23,000 - and 80 per cent of those winners won more than once across the year.

“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,” said Charlene Young, senior pensions and savings expert at AJ Bell.

“The chance of winning any of the top prizes from £5,000 to £1m remains miniscule. The market is still flush with cash accounts, including tax-free ISAs, paying rates higher than the Premium Bond estimated prize fund rate - so there is a huge amount of money making no return whatsoever when savers could otherwise be raking in more than 4.5 per cent.

“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, especially if you have a small amount saved in the bonds.”