National Savings & Investments, the government’s own savings bank, is safe, steady and unexciting. Correct? Well, possibly – that is, unless you’ve got Premium Bonds. Think: you could win £1 million! And you don’t need to risk your stake – you can get your money back at any time. What could possibly be wrong with that?
Let’s bring this back down to earth. The chance of you winning that £1 million is possibly as likely as me winning Britain’s Next Top Model (my application form was obviously lost in the post). Indeed, the chance of a single bond winning any prize (the smallest of which is £25) is 30,000 to one. And from May, while the odds will remain the same, the number of prizes will fall so there will be two, not three £100,000 prizes and nine, not 10, £25,000 ones. There will also be fewer £10,000, £5,000 and £1,000 prizes but more at £25 – and there will still be two £1 milloin jackpots. It’s because the prize fund is being cut from £69.5 million this month to £63.8 million in May.
National Savings is also cutting rates on some of its savings accounts – but to sweeten this slightly is the impending arrival of a new three year bond at probably 2.2% on £3,000, due to go on sale in the spring (watch out: the rate might be confirmed in the Budget on 8 March).
Anyway, Premium Bonds: frankly, if you have an ordinary savings account you are earning such little interest you might as well put it in Premium Bonds even if you are unlikely to get a £1 million prize. My late mother had lots of them, and while she never gambled in her life (not even the lottery) she loved Premium Bonds and enjoyed getting the prizes through the post. She even logged the numbers of the bonds so she could see which her luckiest numbers were. I think the most she ever won on a single bond was £500 (and she had close to the maximum investment of £50,000) but she actively enjoyed her investment: and how many other ways of saving could offer that?
See our quick guide to getting the best rate for savings here.