Premium Bonds - the underrated underdog of investing? 

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Last updated: July 31, 2023

This month (July 2023), NS&I (National Savings & Investments) declared that the Premium Bond prize rate will reach its highest level since 2007, providing a convincing savings account option. 

Some of the key headlines from NS&I were: 

  • There will be “more prizes, more excitement and more life changing wins” from the August prize draw, with the prize fund rate increasing to 4.00% from 3.70% – its highest level since 2007. 
  • The odds will improve to 22,000 to one from 24,000 to one. NS&I said the move means that each £1 bond will have its best chance of winning a prize in nearly 15 years. 
  • They estimate that the changes will see an extra £30 million added to the prize fund from August, with an estimated 460,000 extra prizes up for grabs. The estimated number of £1 million prizes will remain at two per month, the same as in July. There will be an estimated 77 £100,000 prizes in August, up from 71 in July. And an estimated 154 £50,000 prizes will be available, jumping from 141 in July. 
  • The interest rates that NS&I pays on its direct saver and income bonds accounts will also increase to 3.40%, from 2.85%, effective from July 13. 

So, a compelling offer – but one that has been pushed to the bottom of the pile in our experience. Talking to clients, plus friends and family, it seems that Premium Bonds were popular in the 80s and 90s, a favoured choice for saving hard-earned cash and even bought as a ‘gift’ for loved ones. But (and this is in our experience, not a generalisation), ask many under 25-year-olds and they struggle to tell you what they are. 

Everyone deserves transparency when it comes to money, so here’s our take on how Premium Bonds could work for you...  

Premium Bonds offer a potentially lucrative solution to saving what we refer to as ‘emergency reserves’. They’re tax-free, can be withdrawn at any point without fees (unlike fixed rate ISAs, for example), at present, offer an interest rate not to be sniffed at, plus there is the opportunity to win sizeable figures via their monthly prize draw.  

A great option for that rainy day fund, easily accessed in case the boiler breaks down or you have car troubles – that sort of thing. On the brighter side, a good place to save over a couple of years for that big holiday or renovation project.  

That said, we’d recommend investing any money you aren’t likely to need over the short term in global stocks and shares. Often, they offer a better potential return over the long term and give you the best chance of beating inflation. That’s because, even with a 4.00% average prize on Premium Bonds, you’re still behind the current inflation rate. 

If you’re looking for ways to make the most of your money, get in touch. It’s wise to get an impartial second opinion, before moving savings around – you can arrange a call with us here. It’s free of charge, nothing formal, and we’ll point you in the right direction to save smarter.  

This content is for information purposes and should not be treated as financial advice. We would always recommend speaking to a professional before making decisions regarding your wealth.


The value of investments can fall as well as rise and you may not get back the amount originally invested. Past performance is not a guarantee of future results. Values change frequently and past performance may not be repeated. Even a long-term investment approach cannot guarantee a profit.