Guide to Premium Bonds
Around 23m people in the UK hold Premium Bonds, which were launched in 1956 and are issued by National Savings & Investments
Around 23m people in the UK hold Premium Bonds, which were launched in 1956 and are issued by National Savings & Investments (NS&I).
Every month, more than a million prize-winning numbers are chosen at random by a computer called Ernie (Electronic Random Number Indicator Equipment).
Until August 2005, one person each month bagged a £1 million. Now two bondholders each pocket the top prize. Other monthly payouts currently range from around a million at £50, to four at £100,000.
The chances of winning a cool million with any single £1 bond are 24.5 billion to one. But because the minimum £100 holding provides 100 chances, this cuts the odds to 245 million to one.
However, NS&I (
A good comparison of your winning chances is with the National Lottery. In that, you have a one in 14 million chance of winning with a £1 stake. But unlike the lottery, you do not lose your stake if you do not win on Premium Bonds. You simply go into the following month’s draw.
The only sure way to increase your chances of a prize 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.
Note that phrase “average luck”. 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 interest rate. This means that as a ‘savings vehicle’, Premium Bonds are not the most competitive. The best-paying savings accounts tend to offer far better gross rates of interest (browse our selection of sites offering Savings Accounts).
NS&I sends their so-called Agent Millionaire in person to tell the top winners of their success. It writes to everyone who wins smaller prizes. You can check whether your numbers have come up at http://www.nsandi.com. Around £24m in prize money is waiting to be claimed.
There have been four Ernie machines in operation over the years, each using more powerful computing technology than the last to generate the random numbers. As the number of premium bonds rises, the current Ernie 4 was commissioned to cope with the increase.
From June 2005 Premium Bonds have had 11 digits, while older bonds have nine or ten digits - and Ernie 4 is capable of producing all three variations of numbers.
Winning bonds tend to be ones bought recently because there are simply more newer bonds in the draw.
Since the £1m jackpot prize was introduced in 1994, more Premium Bonds have been bought than in the 38 preceding years. In May 2003, the maximum holding was raised from £20,000 to £30,000, and in that month alone £1bn worth of new bonds were bought. Sales are currently running at more than £400m a month.
It may appear that holders in England’s south-east win the most prizes, but this is simply because there are more Premium Bonds held in the area, compared to the rest of the UK.
In 2004, the £1 million jackpot winners were from the East Riding of Yorkshire, Tyne and Wear, Worcestershire, Devon, Berkshire, Gloucestershire, Cumbria, Surrey, Hampshire, Lincolnshire, the London borough of Newham, and Bristol.
You can buy
The minimum investment is £100, but you can also buy £50-worth of bonds a month by direct debt.
