With NS&I’s Premium Bonds product advertising potential returns of up to an astonishing £1million, many often question if this is more beneficial than a typical savings account.
Premium Bonds offer savers the chance to win extra cash, tax-free, at the start of every month through randomly generated prize draws. But if a person’s number isn’t drawn, they won’t earn any interest or money on their investments that month.
Addressing a viewer on ITV’s This Morning show who questioned whether Premium Bonds are “worth it”, Money Saving Expert Martin Lewis said: “For some people. It’s quite complicated.
“The Premium Bonds prize rate is 4.65 percent, which is less than the top savings accounts. But actually, if you have typical luck, which is based on the median average, you will earn less than 4.65 percent.”
He explained: “Think about it this way, for every person that wins £1million, a lot of people have to win nothing, which is why on average, with typical luck, you get less than 4.65 percent.”
