A new analysis has revealed how likely people are to actually earn anything from a Premium Bonds account. There are approximately 22 million people with Premium Bonds accounts in the UK, each of whom hopes to win money every month. These unique accounts are run by the National Savings and Investments (NS&I). Premium Bonds don’t earn interest, but rather, savers are entered into regular draws for the chance to win tax-free money.
Prizes start at just £25, with top potential earnings coming in at £1 million. This is an appealing idea for many savers, who enjoy the thought of winning massive amounts, far more than what they would earn from interest in another savings account. However, a new analysis by Octopus Money has revealed the average time it takes for Premium Bonds account holders to win anything at all.
Its analysis revealed that almost a third of Premium Bond holders expect to win a prize in the first six months, but that doesn’t translate to the reality of it. In fact, it takes an average of three and a half years for people to win any kind of prize.
Octopus Money surveyed 2,000 UK adults to come up with the findings. It found that the main reason for investing in Premium Bonds is the perceived lack of risk in losing the initial investment, followed by the tax-free status of a win and the possibility of a large return.
However, most people never win anything, and the odds are against you if you have smaller amounts in your account. Over the past five years, 94% of Premium Bond jackpot winners held over £10,000, while three-quarters (75%) held over £25,000.
Over the past ten years, £4.25 billion has been held in Premium Bond accounts that have had no activity. While savers earn no interest through these accounts, they could be earning significant amounts with competitive rates on the market at the moment.
Ruth Handcock, CEO of Octopus Money, said: “While products like Premium Bonds may work well for some, others are missing out on strategies that could grow their wealth and deliver stronger returns over time. Premium Bonds are unlikely to outpace inflation, so your money may seem ‘safe’, but it’s quietly shrinking in value over time.
“The truth is that millions of people could be getting more from their money, but they need access to affordable, personalised advice to help them figure out what’s right for them – something that only 9% of people in the UK currently receive. Without it, they stick with what feels familiar, or they’re left in financial limbo, unsure how to take that first step.
“We want to empower people with the confidence to explore options that help them achieve their long-term goals – not just rely on products that feel ‘safe’ or like a ‘quick win’ but fall short in the long run.”