From the December draw you’ve got a lower chance of winning.
After some massive base rate increases from the Bank of England that saw the Premium Bond prize rate hit the highest level since 1999, they’re now on the way down.
Here’s what this means for your chance of winning, and how it compares to the latest best buy savings accounts.
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What are Premium Bonds
Premium Bonds are effectively savings accounts held with the government. Rather than getting interest back on your savings, you are entered into a draw with a top prize each month of £1 million.
Other prizes vary between £25 and £100,000 and if you do win it’s all tax-free. You can read more about how they work here.
The new Prize Rate
From the January 2025 draw, the prize rate is 4%.
It’s the third cut announced this year. In March the rate dropped from 4.65% to 4.4% only to be cut again for the December draw to 4.15%.
As a result of the previous rate drop, the odds of winning will reduce to 22,000 to 1, from the previous odds of 21,000 to 1. This is staying the same for the January draw.
While the number of prizes have shrunk significantly for the December draw (almost 265,000 less), in January’s draw there will actually be 163,630 more. This takes the total number of prizes up to around 5.9 million although the increase is in the lower value prizes.
The total prize fund is decreasing again, this time by £3.7m. It’s now worth around £431.9 million. This is down to the change in how many of each prizes are available.
The number of £25 prizes will increase, up by more than 306,000, but that’s at the expense of cuts at the other levels.
There are over 142,000 less each of the next level prizes – £50 and £100. And there are smaller reductions for prizes between £500 and 100,000. There are still just two £1 million prizes.
How much could you win?
Here’s how the new increased draw compares to the one at the start of March and December 2024. As you can see there are more “higher value” prizes, so if you win you’re likely to win more money than in previous draws, but you’re just as likely to win a prize of some value
| Value of prizes | Number and total value of prizes in March 2024 | Number and total value of prizes in December 2024 (estimate) | Number and total value of prizes in January 2025 (estimate) |
| £1,000,000 | 2 | 2 | 2 |
| £100,000 | 88 | 83 | 82 |
| £50,000 | 177 | 167 | 166 |
| £25,000 | 353 | 332 | 329 |
| £10,000 | 883 | 830 | 823 |
| £5,000 | 1,766 | 1,664 | 1,648 |
| £1,000 | 18,452 | 17,426 | 17,277 |
| £500 | 55,356 | 52,278 | 51,831 |
| £100 | 2,212,098 | 2,072,099 | 2,001,028 |
| £50 | 2,212,098 | 2,072,099 | 2,001,028 |
| £25 | 1,490,033 | 1,509,458 | 1,815,854 |
| Total number of prizes: | 5,991,306 prizes | 5,726,438 prizes | 5,890,068 prizes |
| Total prize fund: | £461,330,525 | £435,686,300 | £431,938,050 |
Previous Premium Bond prize rates
- December 2024 – 4.15%
- March 2024 – 4.4%
- September 2023 – 4.65%
- July 2023 – 4%
- June 2023 – 3.75%
- March 2023 – 3%
- February 2023 – 3.15%
- January 2023 – 3%
- September 2022 – December 2022: 2.2%
- May 2022 – August 2022: 1.4%
- December 2020 – April 2022: 1%
What you’ll probably win
It’s hard to give an exact figure on your likely winnings as 4% on Premium Bonds doesn’t mean you get £4 back for every £100. That’s the average return if you have average luck.
In reality, it’s only those with close to the maximum £50,000 who are likely to get close to this rate (on average – it could be more or less). While those with less than a grand are likely to win nothing at all. So they’re going to be better options for those with more cash, and less good for those with smaller amounts.
The MoneySavingExpert Premium Bonds calculator usually gives a good indication of the wins over a year. However it’s not yet been updated to the new prize draw rate, so it’s best avoided for now.
And there’s a good chance you’ll get nothing. Since the smallest prize is £25, you’d think you’d need £625 saved to get the lowest prize (£625 + 4% = an extra £25). But it’s not that simple.
With this rate, the odds of a bond (not a person) winning something are 22,000:1. That means for every 22,000 bonds, only one bond will win a prize and 21,999 bonds won’t.
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How they compare to savings accounts
The highest paying easy-access savings account right now with no limit on the balance is from Atom Bank, paying 4.85%. That’s better than December’s prize rate of 4.15% and January’s prize rate of 4%, and it’s a guaranteed return on all balances.
And there are even higher paying options with some restrictions. Santander pays 6% on up to £4,000 on its Edge Saver (though it requires a current account) while the regular saver from Principality offers 8% (though only on £200 a month for six months). These are likely better bets for your initial deposits.
Plus, the top one-year fix is still around 4.8% – so if you don’t think you’ll need the money for a year then these could be a better option.
However it’s worth noting that any prizes won via Premium Bonds are tax free. With interest rates increasing it could be you’re closer to going over your personal savings allowance, so money in Premium Bonds could help you avoid tax.
Or if you’re an additional rate taxpayer then it’s an option instead or as well as ISAs.
What about future interest cuts?
There were 14 successive interest rate rises from the Bank of England between December 2021 and August 2023 – where it was held at 5.25% until August 2024. It’s since dropped to 4.75% and there’s talk of further cuts next year.
If that happens, it will mean most, if not all, savings accounts will react and move their rates down. Fixed rates have already dropped in anticipation and are at their lowest level in a year.
This could mean that the top easy access rates from the banks will drop below this new Premium Bonds prize rate. But of course, NS&I could also then drop the prize rate for Premium Bonds again.
Buying Premium Bonds
When to buy Premium Bonds
There’s one very important rule you need to know about Premium Bonds. Your money needs to have been held in Premium Bonds for a full month before it’s entered into a draw.
That means this December draw will only be for anyone who saves prior to the end of October 2024. and the January draw will be for anyone who has saved before the end of November 2024. It also means it makes sense to deposit money right at the end of a month than at any other time.
How to buy Premium Bonds
You buy Premium Bonds from the NS&I website or over the phone at a cost of £1 each, but you have to buy at least £25 worth. You have to be over 16 years old to buy Premium Bonds for yourself. If you are buying them for children, the account will be held by the parents/legal guardians until the child reaches 16.
Given that you are a high rate tax payer, or worse still, an additional rate tax payer, what does the interest rate on a standard bank savings account have to be, for Premium Bonds to be paying the equivalent rate? (Assuming average luck and fully invested with £50,000)
If the “winnings” rate is 4% tax free and you are paying 40% tax on other savings as a high rate taxpayer, then:
4%÷(1−0.4)=6.67%
For an additional-rate taxpayer (45% tax):
4%÷(1-0.45)=7.27%
Therefore, a standard savings account would need to offer at least 6.67% (for higher-rate taxpayers) or 7.27% (for additional-rate taxpayers) to match the effective return of Premium Bonds, assuming average luck.
Same here, full amount for around 9 months and only ever had a couple of £25 wins.
I was thinking the same thing about there being an error.
Absolutely correct, Nick, thank goodness 1Alan
I have the full £50K which were eligible for both the July and August draws and won nothing. Are there any instances of NS&I having system errors that cause Bonds to be excluded from the draw? Can I query this in any way?
It’s all based on luck. Even with the full 50k it’s not certain you will win anything for months. It’s just more likely you’ll win compared to someone with just 1k invested.
I have a premium bond that was given to me at birth it’s only a £1 one but was wandering if it was worth anything
I have a few bonds from years ago how can I check if they have ever won a prize. I have changed addresses since they were first purchased and I thought that they had been lost in the moving, they have just been discovered again and I was just wondering about them.
Inform NS and I of your latest address. You can check online if your PB’s have won anything.
But Al-Rayan’s 2.1% is not actually guaranteed, nor more importantly is it tax free (although the recent “mini-budget” has made this less important now.
It is actually tax free and always has been.