/ Money

Is it time to cash in your premium bonds?

Child against savings board

Tax-free Premium Bonds might seem like a safe home for your savings with a long-shot of a huge windfall. But have you had enough of waiting for a win and withdrawn your bonds for an alternative investment ?

More than a decade ago, I had a small windfall, which I stashed away in Premium Bonds, just to see how my luck went. I’d heard that the return you could get from regular small prizes could approach savings account rates – and there was always the chance of winning the big one and becoming a millionaire. So I left my money in there and every few months, a cheque for £25 would pop through the letter box. I knew the cash might do better elsewhere, but I didn’t mind as each small payout came with the thrill of thinking my life was about to change.

But the cheques dried up. They became less frequent in 2011, and last year National Savings and Investments announced it was cutting the number of prizes paid out to reflect lower interest rates. Now, my prizes seem to have disappeared altogether. So I’ve given up and cashed in my bonds.

Premium bonds or cash Isa?

Have I done the right thing? If I’d put £5,000 in the average savings accounts over the 10 years I’ve held my bonds, I’d have £6,168. In the average cash Isa, it would’ve grown to £7,024. And if it had been invested in a FTSE All-Share tracker fund, despite the fluctuations, it would’ve grown to £10,800. My prizes have never matched those returns.

Maybe I just had bad luck? Not according to Premiumbondcalculator.com, which estimates a person with average luck and £5,000 of Premium Bonds would collect just £500 in winnings over the next decade. So I’m forgetting Premium Bonds and heading for stocks and shares. A tiny chance of winning a million isn’t worth missing out on the more likely prospect of doubling your money over a decade.

Do you swear by premium bonds or have you taken to investing your money in more reliable returns?


Premium Bonds and the Lottery offer a small chance of winning a lot of money and a much larger amount of being a loser. I would far rather invest in something that offers a reasonable chance of making a modest gain. I have never bought a Premium Bond or a Lottery ticket.

It’s a matter of personal choice.


If you want to invest for income, then Premium Bonds are not the answer. However, with a tax-free effective interest rate of 1.3% (eqivalent to 1.6 or 2.2% for tax payers) with a big-enough holding for long enough you might not do much worse than an ordinary savings account.
For many people the only way they are ever remotely likely to acquire a large sum of money is through a gamble – National Lottery, Euromillions, Football Pools or – Premium Bonds. At least with the latter your stake is not lost. Stock market instead? You’ll get around 3-3.5% return but your investment can go down as well as up – but still, in my view, the best long-term means of saving if you have enough to invest across a large spread of share types. But no great windfall likely.
In anticipation of my premium bond being chosen by Ernie and the March cheques dropping through my letterbox, I’m just planning a sunshine break – back to Holiday Which.


As a 25 year old I have never had any premium bonds and none of my friends have too. But I am a little bit obsessed with the 1960’s, everything from the music to ITV’s Heartbeat and The Royal.

Due to my obsession with the 60’s I have ended up with a Milkman, it’s got me on the tv news and I have been looking into premium bonds. I have to admit it’s not for how much returns I would get. It’s more of the feeling of having them.

I know this goes against all I believe in as a Money Saver**. But I just love the 60’s too much.

**Watching stuff on tv like Heartbeat has given me money saving tips and helped me heat my home for free etc. So it’s not all bad.


Ten years ago I was cashing-in some bonds from Santander and decided to temporarily buy some premium bonds while I decided what to do with the money. I bought £29,990 (I already had £10 worth). Since then I’ve had 152 winners totalling £6400. Without the recession which caused the minimum win to drop from £50 to £25 and the number of bigger prizes to be slashed I would have had well over double that in winnings. They are fun and checking the numbers at the start of the month is great.


In the piece you have compared what you would have got over the last ten years which cash ISAs with what you should get on Ernie over the next ten years. This is meaningless. Please either give the historic data for premium bonds or the compounded amount for cash ISAs over the next ten years based on today’s interest rates.


“it would’ve grown to £7,024” without forcing you to switch to another provider year after year after year, which is something you don’t have to do with premium bonds?

The largest win ever had is £500.

Since the recession with the lowest prize dropping to £25, the winnings have reduced, so I’m now down to about £500-£700 a year from around £1200.


I’ve just tried Premiumbondcalculator.com (never heard of it before) with my numbers from my previous post ie the PAST 10 years. It says “You are lucky – only 2.25% of people who have put £30,000 in premium bonds over 10 years win £6400 or more. ” What? I find that hard to believe.


You could always use


as its potentially a much more reputable site.


Thanks, but that takes you to the same website.