What Are Premium Bonds?

Premium Bonds are a popular UK savings product offered by NS&I (National Savings and Investments). Instead of paying interest, your money enters a monthly prize draw. You could win tax‑free cash prizes ranging from £25 to £1 million.

The key difference from a regular savings account is that you might win big. But there’s also a chance you could win nothin

How Do Premium Bonds Work?

onds, each £1 becomes one bond. You must hold at least £25 worth. You can invest up to £50,000.

Every month, NS&I’s electronic system, known as ERNIE (Electronic Random Number Indicator Equipment)

The odds of winning depend on how many bonds you hold. As of 2025, the odds for each £1 bond are 21,000 to 1 for any prize.

Prize Draw Dates and Results

Draws take place monthly. NS&I publishes results on its website, usually on the first working day of the month. You can check if you’ve won by entering your holder number online.

Some winners choose to have prizes paid into their bank accounts. Others reinvest their winnings into more bonds to increase their chances in future draws.

Are Premium Bonds Worth It?

Premium Bonds appeal to people who like the idea of a possible big win without risking their capital. Your money is 100% secure because NS&I is backed by the UK government.

However, they may not be the best choice if you want a guaranteed return. Some months you might not win anything, meaning your effective return could be zero.

If you hold the maximum £50,000, you’re more likely to win regularly. Smaller investors may win less often.

 

All Premium Bonds prizes are free from UK Income Tax and Capital Gains Tax. This makes them especially attractive to higher‑rate taxpayers who want a tax‑efficient way to save.

Tips to Increase Your Chances

While you can’t influence ERNIE’s draw, there are ways to improve your odds:

1. Hold more bonds – The more you hold, the more entries you have each month.

2. Keep your bonds for longer – Every month is a new chance to win.

3. Reinvest winnings – This adds to your bond total over time.

Final Thoughts

Premium Bonds combine saving with a lottery‑style prize draw. They offer security, tax‑free winnings, and the thrill of a possible £1 million jackpot. But they may not suit those who want a guaranteed interest rate.

For some, the excitement of checking the monthly results is worth the gamble. For others, a high‑interest savings account might be a better fit.