Premium Bonds continue to be a popular choice for savers as it is Government back and the prize draw means Britons could win up to £1million each month.
As the draw pick is random, anyone could be picked, even those with little savings.
On X, one user celebrated as they has won at least £5,000 over the years, even whilst just holding £150 at the time.
One post went viral, with other one million engagements and it stated: “Someone just won £50,000 for holding a £125 premium bond for less than 2 year’s.
“Let me start paying attention to my premium bonds. Most I have won was £5,000 and held around £150 for 2 years at the time.”.
X users took to the comments, replying: “Where do I sign up?”
However, Kevin Mountford, savings expert and co-founder of the savings platform Raisin UK, warns of the actual chances of winning payouts – and instead highlights why many should reconsider standard savings accounts.
He said: “For various reasons, Premium Bonds continue to be attractive to UK savers. NS&I is a well-recognised, trusted provider and provides the saver with the confidence that their deposits are protected, in full, by the UK Govt, plus any winnings are free from tax. In fact, around 24million savers hold Premium Bonds and collectively have invested more than £120billion.
“The idea of winning the £1m jackpot is another attractive aspect of Premium Bonds, but in reality, the majority of savers have little or no chance of winning this, and in fact, anyone with a single bond only has a 1/21,000 chance of winning the min £25 payout.
“Whilst we faced a decade of record low interest rates, you could understand why people would think it is a chance worth taking, but now, with a bank base rate of 5.25 percent, it would make sense to turn the attention to more traditional cash savings products.
“Mainly if you can afford to lock away your money for 12 months you can guarantee a return of over five percent and similar rates can be obtained across the leading Easy Access offers albeit the rate is variable so it can fall.”
However, Mr Mountford warned there is another consideration.
With interest being at the level they are, it challenges the tax savings allowance of between £500 – £1000, and this could net off some of the interest earned on standard cash offerings, hence the reason some savers are again turning their attention to ISAs, he explained.
He summarised that the decision depends somewhat on one’s personal circumstances.
If people can’t afford to invest a sizeable sum into Premium Bonds, it might be worth taking out a couple of standard savings accounts.
He suggested people put some money away in a Fixed one-year bond and guarantee their return, then top this up with a leading Easy Access account.
He added: “But be mindful of the possible tax liability that could apply to interest earned from these.”
NS&I has announced it will be reducing the Premium Bonds prize fund rate from the March 2024 draw.
The prize fund rate will drop from 4.65 percent to 4.4 percent, but the odds of any £1 Bond number winning a prize will remain the same at 21,000 to one.
Andrew Westhead, NS&I retail director, said: “These changes reflect our requirement to strike a balance between the interests of our savers, taxpayers and the stability of the broader financial services sector.
“In a dynamic savings market, it’s important that our rates are set at an appropriate position against those of our competitors as we work towards meeting our annual Net Financing target.
“After these changes, the Premium Bonds draw in March is expected to pay out over 5.7 million tax-free prizes totalling more than £444million to savers across the UK.”
