Key Highlights
- Martin Lewis says Premium Bonds aren’t worth it for the ‘vast majority’ of UK savers.
- The NS&I scheme offers tax-free ‘winnings’ but typically earns less than high-interest savings accounts.
- While luck plays a significant role, odds of winning are low with the average yearly prize rate standing at 3.6%.
- Premium Bonds can be beneficial for those who have used up their annual ISA allowance or hold larger sums.
Money Saving Expert’s Take on Premium Bonds
In a recent article, Martin Lewis, the well-known financial guru and founder of Money Saving Expert (MSE), advises that most UK savers would be better off choosing alternative investment options over Premium Bonds. According to Lewis, these bonds are not recommended for the ‘vast majority’ due to their low return rates compared to high-interest savings accounts.
The Basics of Premium Bonds
Premium Bonds operate through the National Savings and Investments (NS&I) scheme. Savers can purchase bonds worth £1 each, with a minimum holding of £25 and a maximum of £50,000. At the end of every month, these bonds are entered into a draw to win tax-free prizes ranging from £25 to £1 million. However, the likelihood of winning is relatively low; as of October 2025, the odds of winning the top prize are 1 in 2,661,934,000.
Why Premium Bonds May Not Be Ideal
Lewis points out that while a few lucky individuals have become millionaires through this scheme, for the average investor, there is little to no guarantee of a return. The typical punter’s money will usually earn more in high-interest savings accounts, which offer more certainty and higher interest rates.
Exceptions to Lewis’ Advice
The experts at MSE acknowledge that there are certain scenarios where Premium Bonds might be worth considering. For instance, if you have already used up your annual ISA allowance (currently £20,000), the tax-free nature of these bonds could make them a viable option. Additionally, for larger sums, the odds improve as your holding increases, making Premium Bonds a potentially good choice.
Conclusion
In conclusion, Martin Lewis advises that while Premium Bonds can provide an element of excitement through the possibility of large winnings, they are not recommended for most UK savers. Savers looking to maximize their returns should consider high-interest savings accounts or other investment options that offer more predictable and potentially higher returns.
