‘The truth’ about Premium Bonds as people wait 3.5 years to win prize | Personal Finance | Finance

Most Premium Bond savers wait more than three years to win any prizes, despite many expecting a prize within just six months, according to new data.

Premium Bonds, sold by NS&I, are a Government-backed savings product where your money doesn’t earn interest. Instead, each £1 bond gives you a chance to win up to £1million in a monthly prize draw. The prizes are tax-free, and you can’t lose your original investment – but that’s where the benefits often end for everyday savers. New analysis, sourced from a Freedom of Information (FOI) request by Octopus Money, found the average time to win a first prize in 2024 was 3.5 years. Yet, according to Octopus Money’s survey, nearly one in three expect to win within six months. While the appeal lies in the idea of a risk-free, tax-free payout, the reality is that most people never win anything at all.

And when they do, it’s often underwhelming. Last year, 88% of winners took home less than £2,000. Only 0.32% won more than £10,000. Meanwhile, those with the largest holdings statistically took home the most.

Over the past five years, 94% of Premium Bond jackpot winners held more than £10,000, and 75% had over £25,000 invested.

Despite the low odds, just 19% of UK adults believe they could do better elsewhere, and the same number admit they don’t fully understand how Premium Bonds work. Many invest because it feels familiar – 18% said they were influenced by a family member.

But with £4.25billion now sitting in inactive Premium Bond accounts for over a decade, large sums of money are effectively going nowhere.

Ruth Handcock, CEO of Octopus Money, said: “While products like Premium Bonds may work well for some, others are missing out on strategies that could grow their wealth and deliver stronger returns over time. Premium Bonds are unlikely to outpace inflation, so your money may seem ‘safe’, but it’s quietly shrinking in value over time.

“The truth is that millions of people could be getting more from their money, but they need access to affordable, personalised advice to help them figure out what’s right for them – something that only 9% of people in the UK currently receive. Without it, they stick with what feels familiar, or they’re left in financial limbo, unsure how to take that first step.

“We want to empower people with the confidence to explore options that help them achieve their long-term goals – not just rely on products that feel ‘safe’ or like a ‘quick win’ but fall short in the long run.”

Speaking previously on his BBC 5Live podcast, Money Saving Expert founder Martin Lewis suggested people should be looking at putting money in cash ISAs first.

He said: “Because, with typical luck, you will win substantially more in a top one-year fix than you would in Premium Bonds, and you’d see them win more in an easy access cash ISA.

“The thing about Premium Bonds is people live the dream in the hope that they’re going to be the person who wins the £1million and virtually nobody will – but that’s why it’s appealing.

“People always say things like ‘I win £25 every month’, and in my cynical head I go ‘yeah but if you put the same amount of money in the top cash ISA, you get a guaranteed win of £40 every month’.”

Mr Lewis added: “They’re not awful, I’m just about ‘what’s the best?’, and for me, they’re not the best.”