Are Premium Bonds worth it? See what they would really win you
Premium bonds are the most popular savings products in the UK, with over 22 million people holding them and over £136 billion in the scheme. But popular doesn’t always mean the best option for your money. Here’s an honest look at whether they’re worth having.
Written by William Haymonds, MoneyHQ founder and deal editor. Last reviewed . How we check deals
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How much would you hold?
A typical year's prizes
- The average, which is what the 4.35% prize rate means£435
- One holder in ten wins less than£150
- Nine holders in ten win less than£675
- Prizes in a year, on average5.7
- Chance of winning nothing all year0.3%
- Chance of £5,000 or more in a year1 in 324
- Chance of the £1 million in a year1 in 574,000
Worked out from NS&I's prize table for the November 2026 draw: each £1 bond has a 1 in 21,000 chance in each monthly draw, over twelve draws. Most prizes are £25 to £100, so a typical year is below the average. NS&I's figures, read 30 October 2026.
The same £10,000 in a savings account
| Where | Rate | A year | After tax | Account |
|---|---|---|---|---|
| Premium Bonds, a typical year (average £435) | 4.35% prize rate | £350 | Tax free | NS&I |
| LemFi, Instant Access Account (easy access) | 5.00% AER | £500 | Choose your band | See it |
| Chip, Smart Cash ISA (easy access Cash ISA) | 4.86% AER | £486 | Tax free | See it |
On £10,000, in a typical year, LemFi Instant Access Account pays the most: £500 before tax. Prize rates and account rates both move. This is a calculation, not advice.
Rates are ones we read on the provider's own page, from accounts that take £10,000 and let you take money out when you like, as Premium Bonds do. Fixed rates pay more for locking money away and are on our savings page.
Tell me when a verified easy access rate beats 5.00%
We check every rate on our shelf against the provider's own page. When one we have verified passes it, you get one email with the account.
Are premium bonds worth it?
What are premium bonds?
Premium bonds are a savings product from NS&I, the government-backed savings provider. Instead of earning interest, your money is entered into a monthly prize draw. Prizes range from £25 up to £1 million, completely tax-free.
You can hold between £25 and £50,000 in premium bonds. Every £1 gives you one bond number, and every bond number is entered into the draw each month.
The current prize fund rate is 4.35% but that’s not a guaranteed return. It’s the rate that would apply if all prizes were distributed equally across all bonds. In practice, most people win less than that, and some win nothing at all for months or years. However, two people win £1million tax free each month.
Premium bonds pros
Your money is 100% safe Premium bonds are backed by the UK government through NS&I. So, there’s no risk of losing what you put in, and no FSCS limit to worry about with the full £50,000 being protected regardless.
Prizes are tax-free Any prize you win is completely free of income tax and capital gains tax. For higher and additional rate taxpayers who have already used their personal savings allowance, that tax-free status has real value.
Easy access You can withdraw your money at any time with no penalty. There’s no fixed term and no notice period. As a rule, NS&I will aim to return funds within three working days.
The million pound draw Every £1 bond has the same shot at the £1 million prize each month which is roughly 1 in 69 billion odds. Slim, but a savings account can never pay you a million pounds overnight.
Premium bonds cons
The return isn’t guaranteed The prize fund rate of 4.35% sounds competitive, but your actual return depends entirely on luck. The median return (what most people actually get) is lower than the headline rate. Smaller balances are particularly affected: if you hold £1,000 in premium bonds, you’re likely to win nothing for long stretches.
Easy access savings accounts often beat them Several easy access savings accounts currently pay above 4.35% AER as a guaranteed rate. Unlike premium bonds, that return is certain and you earn it every month regardless of luck. For most people with smaller balances, a high-rate easy access account will outperform premium bonds in practice.
Luck-dependent Two people with identical balances can have very different experiences. One might win several times in a year; another might win nothing. For people who need a predictable return (to hit a savings goal by a set date, for example) that uncertainty can be a real drawback.
So are they worth it?
It depends on your situation.
Premium bonds make most sense if you’re a higher or additional rate taxpayer who has used your personal savings allowance, you want absolute security with no FSCS cap concerns, or you already have money sitting in a current account doing nothing, in that case, premium bonds are almost certainly better than leaving it idle.
They’re less compelling if you have a smaller balance, need a predictable return, or haven’t yet checked what easy access savings accounts are currently paying. At current rates, several accounts guarantee a return that premium bonds would need a decent run of luck to match.
The honest answer: premium bonds work best as part of a broader savings strategy, not as your only savings option. Check what guaranteed rates are available at your balance before deciding. The calculator above can help you see how premium bonds compare with what you could earn elsewhere.
How do premium bonds compare with easy access savings right now?
The prize fund rate is 4.35%, but that’s not guaranteed. Currently you can get up to 5% with easy access savings accounts, beating NS&I premium bonds, however easy access accounts paying interest may be subject to tax therefore changing the rate of return you get in your pocket.
| Provider | Account | AER | Holds up to |
|---|---|---|---|
| cahoot | Sunny Day Saver | 5.00% | £3,000 |
| LemFi | Instant Access Account | 5.00% | £250,000 |
| Oxbury bank | Oxbury bank easy access saver | 4.57% | £120,000 |
| cahoot | Simple Saver | 4.52% | £500,000 |
| Chase | Saver | 4.50% | £3,000,000 |
Rates change regularly. Last updated 31 October 2026.
NS&I prize fund rate correct at time of writing (30 October 2026). Savings account rates change regularly - use the comparison above to see the best rates available now.
The working behind the figure, with the maths shown rather than a shortcut.
Why a typical year wins less than the prize rate
The 4.35% prize rate is an average across every bond, and the £1 million and £100,000 prizes are part of it. Almost every prize is £25, £50 or £100, and the big ones land on very few people. So most holders win less than the prize rate in a year, a few win far more, and the average sits above the middle.
On £10,000, the average is £435 a year, but a typical holder wins about £350: half of people with £10,000 win more than that, half less. One in ten wins under £150.
How the calculator works it out
Each £1 bond has a 1 in 21,000 chance of a prize in each monthly draw, and a winning bond gets a prize in proportion to how many of each NS&I puts in the draw: 1,725,940 prizes of £25, 2,377,614 of £100, 2 of £1 million in the November 2026 draw. The calculator adds up every way twelve draws can fall for your holding and gives the middle result, not a simulation and not a guess.
NS&I's prize table and its headline rate agree: twelve draws of prizes, over the bonds in the draw, comes to the published prize rate. If either is mistyped here, our checks fail before the page can change.
Against a savings account
Premium Bonds can be cashed in when you like, so they are set against easy access accounts and easy access Cash ISAs, using rates we read on each provider's own page, and only accounts that take the amount you typed. Fixed rates usually pay more for locking money away.
Prizes are tax free, and so is Cash ISA interest. Interest on an ordinary savings account is taxed once it passes your Personal Savings Allowance: £1,000 a year at basic rate, £500 at higher rate and nothing at additional rate (2026 to 2027). Choose your tax band to see what the account would leave you. That is where Premium Bonds can come out ahead for higher-rate taxpayers.
What is the Premium Bonds interest rate?
Premium Bonds pay prizes, not interest. The prize fund rate is 4.35%, variable, which is the average return across every bond, read from NS&I on 30 October 2026. Most holders win less than that in a year, because a few large prizes lift the average.
What are the odds of winning on Premium Bonds?
Each £1 bond has a 1 in 21,000 chance of winning a prize in each monthly draw. With £10,000 that is about 5.7 prizes a year on average. The chance of the £1 million on £10,000 is 1 in 574,000 a year.
How much do Premium Bonds pay on average?
At the 4.35% prize rate, £10,000 averages £435 a year, but a typical holder wins about £350. Type your own amount above for your figures.
Are Premium Bond prizes taxed?
No. Prizes are tax free and do not count towards your Personal Savings Allowance, which is why they can compare well against taxed interest for higher-rate and additional-rate taxpayers.
Premium Bonds or a Cash ISA?
Both are tax free. On £10,000 today, Chip's easy access Cash ISA at 4.86% pays £486 a year, set against a typical Premium Bonds year of £350. A Cash ISA takes at most a year's ISA allowance; Premium Bonds take up to £50,000.
Premium Bonds or a savings account?
On £10,000, LemFi's easy access account at 5.00% pays £500 a year before tax, against a typical Premium Bonds year of £350 tax free. Whether tax changes the answer depends on your band and your other savings, which the calculator lets you choose.
How much can I put in Premium Bonds?
From £25 to £50,000 per person. New bonds join the draw once they have been held for a whole calendar month: bonds bought in November first go in the January draw.
How are Premium Bond prizes paid?
Usually straight into your bank account, normally by the seventh working day of the month, or reinvested in more bonds if you choose. You can also ask for a cheque, which takes longer.
How do I check if I have won?
NS&I runs the prize checker on its own site and app: you need your holder's number. The calculator here shows what you would expect to win, not whether a bond has won.