Premium Bonds savers issued new £8,122 alert (Image: Getty)
Millions of Premium Bonds holders have never won a prize, with many losing out on significant returns elsewhere as a result, new data suggests.
Premium Bonds, a savings account offered by NS&I, don’t earn interest traditionally and consistently. Instead, each bond is entered into a randomly generated prize draw, offering holders the opportunity to win between £25 and £1million every month. However, 14.3 million holders have never won a prize, according to an AJ Bell Freedom of Information request. This represents a staggering 62% of holders, with serial losers holding bonds for 8.1 years. By keeping cash in Premium Bonds rather than in a consistent interest-bearing savings account, people are potentially missing out on thousands of pounds in interest, financial experts have warned.
More than 24 million people hold NS&I’s Premium Bonds in the UK. (Image: Getty)
Sarah Coles, head of personal finance at AJ Bell, said: “The Premium Bonds odds are stacked against you. In any given month, each bond has a 22,000 to 1 chance of a win of any kind, and a vanishingly small chance of winning a life-changing sum of money.
“The bonds don’t pay any interest, so if you don’t win, you don’t get a return on your money. It means that over time, you’re losing spending power after inflation, and the impact can be shocking.”
Bondholders who have never won a prize hold an average of £128.91. In cash savings, that £128.91 could have grown 17% into an average of £150.82 in 8.1 years, according to AJ Bell’s calculations, or £5,850 if they’d started with £5,000.
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If they’d invested that money into a global tracker fund for that period, that £128.91 could have grown by 162% to £338.30 or £13,122 off an initial investment of £5,000. Based on these calculations, savers could miss out on returns of £209.39, or £8,122 by keeping their cash in Premium Bonds without winning anything.
Ms Coles said: “There will always be people who love Premium Bonds, and there will be those who have never won but still cling to the hope that their lucky day might be around the corner.
“However, if you’ve left money in these bonds for years, it’s worth considering how much you’ve won overall, and asking yourself whether you have kept pace with inflation, or whether your money could be working harder for you in savings or investments.”
An NS&I spokesperson said: “Premium Bonds are a fun way to save and offer customers the certainty of getting back the full amount they put in, along with the chance to win tax‑free prizes every month. By contrast, the value of some other forms of investments can go down as well as up, and investors may get back less than they originally invested.
“Premium Bonds remain one of the nation’s favourite savings products. They offer the excitement of potentially winning tax‑free prizes every month, the safety and security of the 100% Government guarantee, and easy access to withdrawals.”
NS&I’s latest Premium Bonds draw saw over six million prizes worth more than £433 million. Since the first prize draw in June 1957, 845 million prizes have been issued, totalling £42billion.
Every Premium Bond has a separate and equal chance of securing a prize each month. However, the savings instittution said the more Bonds you buy, the better your chances of winning.