How likely are you to win a prize with NS&I Premium Bonds?
People LOVE Premium Bonds because they give you the chance to win cash prizes (up to £1 million) every month.
But while the thrill of potentially winning a prize can spice up your saving, are Premium Bonds the best way to make the most of your money?
Here’s everything you should know, including how they work, whether they’re tax free, and how to buy and cash them in:
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What are Premium Bonds?
Premium Bonds are a very popular type of savings account from National Savings & Investments (NSI) that offer customers the chance of winning cash prizes instead of paying interest.
Each bond costs £1 although you have to buy a minimum of £25 worth at a time. This gets you 25 entries into each monthly draw. The maximum number of bonds you can have is 50,000 worth £50,000.
Any prizes you win are tax-free – in fact, Premium Bonds are entirely tax free, since there’s no interest to declare in the first place – and 100% of your money is backed by the Treasury. If you have more money in other NS&I accounts it’ll all be protected – there’s no £120,000 limit as there is with providers covered by the Financial Compensation Services Scheme. And as with savings, your Premium Bonds won’t lose value.
Your money is easy-access so you can cash the bonds in at any time. However, it can take up to eight working days for the money to reach your current account.
Some 24 million people have Premium Bonds (including more than 850,000 kids) and they’ve been around since the 1950s.
The first prize draw was in 1957 and fun fact – the machine used to generate random numbers for the draw (the Electronic Random Number Indicator Equipment, known as ERNIE) was invented by a Bletchley Park codebreaker.
Premium Bond prizes
Right now there are about 6.5 million prizes to win each month ranging from £25 to £1 million.
As you can expect, there are loads more of the lower value prizes compared to the bigger ones. Almost 99% of the total number of prizes are £25, £50 or £100.
There are two £1 million prizes to win each month so 24 chances a year to win. But, in reality, it’s very unlikely you’ll win one of these big prizes.
The Premium Bond prize rate can change, and it’s moving to 4.35% in September.
The prize rate doesn’t mean you’ll get a 4.35% return on your savings. Instead, it suggests an average of £4.35 is paid out for each hundred pounds invested in bonds.
But it’s not as cut and dry as that because there is no £4.35 prize! Since the minimum is £25, it means not every bond can win each time. There’s no guarantee you’ll win anything and let’s be honest, most bonds don’t.
To give you an idea of the prizes available, here are all the ones listed for August draw and expected September numbers and how they compare to previous draws.
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How likely am I to win a prize with NS&I Premium Bonds?
At the moment, the odds of winning a prize are 21,000 to one – so they’re not great.
The more money you have in Premium Bonds, the better your chances of winning.
Using an online calculator and based on the 3.8% prize rate from May, here’s what your odds of winning could look like, based on the value of your investment over a year, based on average luck:
| Amount in Premium Bonds | Median (average luck) winnings | Equivalent interest rate |
| £100 | £0 | 0% |
| £1,000 | £0 | 0% |
| £2,000 | £50 | 2.5% |
| £10,000 | £350 | 3.5% |
| £25,000 | £925 | 3.70% |
| £50,000 | £1,900 | 3.8% |
Based on the chart above, even with average luck, everyone is earning below the prize rate. Of course, a tiny handful will do far better, but what’s more likely, is that most people won’t win anything.
Around 14.4 million people, or two-thirds of Premium Bond holders, have never won a prize with the Premium Bonds, according to a Freedom of Information request made by investment firm AJ Bell. Of the 5.3 million people who did win between June 2023 and May 2024, the average holding was £23,047.
And let’s not forget Andy’s friends’ experience with Premium Bonds. The three of them invested £50,000 in Premium Bonds for a year and had very different results.
Featured deal
Customer rating
3.9/5
- Switch bonus£240
- Perks8% regular saver
- Monthly fee0
- Offer endsUnknown
- FSCS Protected? Yes
- Bonus requirements To get the £240 switch offer, you need to complete a full switch with the Current Account Switching Service. Then, within 60 days of your initial switch request, you need to set up two active direct debits, deposit £1,500 into the current account, set up a Santander Regular Saver, and deposit £200 into it.
- Regular saver 8% (variable) regular savings account. Includes 5% (variable) bonus for 12 months
- Existing customers? You can't have held a Santander account on 1 January 2026.
How do Premium Bonds compare with savings accounts?
Not great. If we look at the top rates of easy access accounts now, which are the closest comparable account to Premium Bonds, new customers can quite a bit higher than the current Premium Bond prize rate and it’s guaranteed.
You could also consider a Cash ISA, which often beat the prize rate too, and all your returns will be tax free.
You could get an even higher rate with some restrictions. For example, Santander pays 6% on up to £4,000 on its Edge Saver (you’ll need a Santander current account) while there are regular savers offering up to 8%.
As a general rule when you’re looking at savings rates, if it’s the same or higher than the Premium Bonds prize rate, you’ll probably be better off going with the savings account. However, if they’re variable rates, they could change, so it’s important to keep an eye on your accounts.
Premium Bonds and tax
Any prizes you win are tax-free – and this can be a big draw if you’re someone who’s likely to pay tax on your savings interest or are a higher or additional rate taxpayer.
If we look at standard savings accounts, though not ISAs, only some of the interest you earn is tax free.
If you’re a basic rate taxpayer you get a £1,000 Personal Savings Allowance each year and if you’re a higher rate taxpayer you get a £500 allowance. Any savings interest above this will be taxed at your usual income tax rate.
Additional rate taxpayers don’t get any tax-free allowance – which means any savings interest they earn will be taxed. It’s why Premium Bonds can be much more appealing to those on higher incomes, especially if they’ve also exceeded their annual ISA allowance.
Should I buy Premium Bonds?
For most people, savings accounts are a better option than Premium Bonds, especially since the prize rate has been cut.
But for the higher earners, they might still hold a bit of allure because of the tax-free prizes.
ISAs should be your first port of call but if you’ve maxed out your £20,000 allowance and you’re likely to pay tax on your savings interest, Premium Bonds might be worth considering.
Or you might like Premium Bonds because of the thrill of potentially winning a million pounds – or other generous prizes. However, while someone has to win it (and they do!) many people never will and you could get absolutely no return on your money for as long as you have the bonds.
Generally speaking, even if you have the maximum £50,000 in Premium Bonds, you’re still far short of the rates of the top easy-access or limited-access accounts.
It’s also not a great idea to have that much money in easy-access accounts anyway. As a rule of thumb, you want to keep between three and six months outgoings in these accounts to make sure you’re covered in case of an emergency. This could include losing your job, replacing the boiler or fixing your car if something goes wrong with it unexpectedly.
Your money’s best placed in an easy-access account or Cash ISA paying a top rate and then you can consider other options depending on how much cash you have and what your goals are.
For example, for long-term saving you may want to consider investing or contributing more to your pension, and making the most of the tax advantages.
Featured deal
Customer rating
3.9/5
- Switch bonus£240
- Perks8% regular saver
- Monthly fee0
- Offer endsUnknown
- FSCS Protected? Yes
- Bonus requirements To get the £240 switch offer, you need to complete a full switch with the Current Account Switching Service. Then, within 60 days of your initial switch request, you need to set up two active direct debits, deposit £1,500 into the current account, set up a Santander Regular Saver, and deposit £200 into it.
- Regular saver 8% (variable) regular savings account. Includes 5% (variable) bonus for 12 months
- Existing customers? You can't have held a Santander account on 1 January 2026.
How to buy Premium Bonds
You have to be over 16 years old to buy Premium Bonds for yourself.
You can get Premium Bonds from the NS&I website. Alternatively you can buy them via the post or by phone.
But if you’re buying Premium Bonds for someone else’s kids, you can’t buy them over the phone, and you won’t be able to buy Premium Bonds for yourself or anybody else by credit card.
When to buy Premium Bonds
The Premium Bond draws take place at the start of each month, but you’re only eligible for each draw on bonds that have been invested for a full month.
This means you’re better off buying them at the end of a calendar month than at any other point.
How to check and cash in Premium Bonds?
The quickest way to find out if you’ve won is by entering your account number into the NS&I Premium Bond prize checker or the app version (you can get this on the App store or Google Play). It’ll show you this month’s prizes, anything you’ve won in the previous six months and any older prizes you’ve not claimed yet.
You can also ask Alexa if you’ve won. You’ll need to open the Skill on the Alexa app and follow the steps.
To cash in or withdraw from Premium Bonds, log into your NS&I account online or via the app and request a withdrawal. You can cash in some or all of your bonds. It typically takes up to eight working days for the money to reach your bank account, so it’s worth planning ahead if you need the cash by a specific date.
Frequently Asked Questions
What are Premium Bonds?
Premium Bonds are a savings product from NS&I that offer the chance to win tax-free cash prizes each month instead of paying guaranteed interest.
How do Premium Bonds work?
Each £1 bond is entered into a monthly prize draw, with prizes ranging from £25 to £1 million. Your capital is never at risk, but there’s no guarantee you’ll win anything.
Are Premium Bonds tax free?
Yes, any prizes you win from Premium Bonds are completely tax free, regardless of your income tax band.
How do you buy Premium Bonds?
You can buy Premium Bonds online via the NS&I website, or by post or phone, as long as you’re over 16 and buying for yourself or a child.
How do you cash in Premium Bonds?
You can withdraw some or all of your Premium Bonds online or via the NS&I app, with the money typically reaching your bank account within eight working days.
Can you lose money with Premium Bonds?
No, your capital is 100% protected since it’s backed by the Treasury, though inflation can erode its real value if you never win a prize.
Is there a minimum amount of time you have to hold Premium Bonds?
No minimum holding period applies, but bonds only become eligible for the prize draw once they’ve been held for a full calendar month.
Expert thoughts on how Premium Bonds work and whether they’re tax free from Be Clever With Your Cash
The tax-free status of Premium Bonds is the single biggest reason they make sense for some savers and not others. For a basic-rate taxpayer with modest savings, a top easy access account or Cash ISA will usually beat the average Premium Bonds return, since most people’s interest falls within their Personal Savings Allowance anyway. The maths only really shifts in favour of Premium Bonds once someone is a higher or additional rate taxpayer who’s also maxed out their ISA allowance.
It’s worth being realistic about the odds too. A 21,000 to one chance per bond, per draw means the average saver with a modest holding is genuinely more likely to win nothing across an entire year than to see the 4.35% prize rate reflected in their own return. That doesn’t make Premium Bonds a bad product – the capital protection and tax-free prizes are genuine benefits – but the marketing emphasis on big jackpots can distort how people think about their likely actual return.
Buying at the right point in the month is a small but easy win that’s often missed. Since bonds only enter the draw once they’ve been held for a full calendar month, buying on the last day of the month rather than the first gets money working for you almost immediately, rather than sitting out an extra few weeks before it’s eligible for a prize.
