Premium Bond holders who have never received prizes might have missed out on higher returns, according to a recent analysis. On average, individuals with unsuccessful Premium Bonds have saved about £128.91 over an average period of 8.1 years.
However, a study by AJ Bell revealed that if this amount had been placed in a cash savings account, it could have grown by 17% to approximately £150.82. Conversely, investing the same sum in a global tracker fund could have resulted in a 162% increase to around £338.30 during the same period.
For those who started with £5,000, their savings would have grown to £5,850 in cash savings or a significant £13,122 if invested. With inflation rising by 47.9% over the past 8.1 years, individuals would need £191 today to maintain the same purchasing power. Approximately 14.3 million Premium Bond holders have never won a prize, representing 62% of all Premium Bond holders.
Currently, over 22 million individuals hold Premium Bonds, with odds of winning a prize with a single £1 bond standing at 22,000 to 1. Premium Bonds, offered by NS&I, operate as a unique savings product where participants are entered into a monthly prize draw instead of earning interest.
The minimum monthly prize is £25, while the top prize reaches £1 million. While two £1 million prizes are typically awarded each month, numerous smaller prizes are also distributed. The maximum savings limit for Premium Bonds is £50,000, and each £1 invested generates a distinct bond number.
Sarah Coles, the head of personal finance at AJ Bell, emphasized that Premium Bonds do not accrue interest, leading to a loss of purchasing power if prizes are not won. Coles suggested that individuals reassess whether their money could be more effectively utilized in savings or investments to combat inflation.
To check for any potential winnings, individuals can use the NS&I online prize checker tool or the Premium Bonds prize checker app. An NS&I spokesperson highlighted that Premium Bonds offer a fun savings opportunity with the chance to win tax-free prizes monthly, along with the security of the government guarantee and easy withdrawal access.