Premium Bonds are the nation's favourite savings product — with over 23 million people holding them — but whether they are actually worth your money depends entirely on your circumstances and how lucky you are feeling.
- How the prize rate works
- Who are Premium Bonds best suited for?
- How to buy and manage Premium Bonds
Premium Bonds are issued by NS&I, the government-backed savings institution, and instead of paying interest, they enter you into a monthly prize draw. Prizes range from £25 all the way up to £1 million, and all winnings are completely tax-free.
How the prize rate works
NS&I sets a prize fund rate, which represents the total value of prizes paid out as a percentage of the total amount invested. In 2026 the prize fund rate sits at around 4.4%, but this is a theoretical average — your actual return depends entirely on whether your bonds win prizes.
The odds of any individual £1 bond winning a prize in a given month are currently 1 in 22,000. With the maximum holding of £50,000 you would statistically expect to win a prize most months, but with smaller amounts your actual returns can vary enormously from the headline rate.
Who are Premium Bonds best suited for?
Premium Bonds make the most sense for higher and additional rate taxpayers who have already used their ISA allowance. Because prizes are tax-free, they can be more valuable than a taxable savings account paying a similar rate for people who would otherwise pay tax on their interest.
For basic rate taxpayers who earn less than £1,000 in savings interest annually, a straightforward easy-access savings account paying 4.75% AER will almost certainly beat Premium Bonds in practice.
How to buy and manage Premium Bonds
You can buy Premium Bonds online at nsandi.com, by phone, or by post. The minimum purchase is £25 and the maximum holding is £50,000. Bonds are eligible for the prize draw one full calendar month after purchase, so bonds bought in May will first be entered in the July draw.
You can check whether your bonds have won at nsandi.com or using the NS&I prize checker app each month after the draw.
Bottom line
Premium Bonds are a genuinely useful savings option for higher rate taxpayers and those who enjoy the excitement of the monthly draw. For most people though, a top easy-access savings account or Cash ISA will deliver more reliable and likely higher returns. Use our free savings calculator to compare what you could earn.