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Premium bonds

National Savings

The Premium Bond prize fund rate is increasing from 3.15 percent p.a. to 3.40 percent p.a. tax-free, from January 2007. The rate for December 2006 will rise to 3.55 percent p.a tax-free; however this is due to the three extra £1 million jackpot prizes.

The odds of winning a prize will stay at 24,000 to 1, meaning that someone with the maximum investment in Premium Bonds of £30,000 could, with average luck, win 15 tax-free prizes a year.

The popularity of Premium Bonds has grown dramatically over the past five years as the amount invested has doubled to over £24 billion.

ERNIE (Electronic Random Number Indicator Equipment) which still picks the winning numbers, took 10 days in 1957 to carry out the first draw. The machine now takes a mere 6 hours. A new ERNIE was built in 1973 to cope with the increasing amount of Premium Bond numbers. The latest model was built in 1988, although the generation of winning numbers is carried out in exactly the same way.

Premium Bonds are National Savings biggest seller. Each month one lucky bondholder wins the �1 million monthly jackpot.

Although the big prize to be won may not match up to lotto you have to remember that unlike the Lottery, Premium Bond holders do not lose their stake after every draw. Your bonds automatically go into the next draw whether you win or lose - as long as you do not sell them.

You can cash in your bonds at any time so the only gamble you take is the loss of interest your money could have earned elsewhere.

But it all comes down to the luck of the draw. You could win more and our could win less.

Bond facts:

  • Since the first draw in 1957, ERNIE has given away over 110 million prizes worth over £7 billion. Prizes range from £50 to £1million.
  • There is currently £23.6 million in unclaimed prizes. There is no time limit on claiming prizes. Premium Bond investors can check to see if they have won by logging on to www.nsandi.com and using the Premium Bond prize checker.
  • The minimum you can buy is �100 worth of bonds at �1 each or �50 if you reinvest your winnings under the automatic prize reinvestment mandate. Maximum is �30,000
  • If you buy bonds in July, your first change of winning will be in the September draw.
  • If you sell your bonds, allow eight working days for your money to arrive
  • Anyone age 16 or over can buy bonds. Parents, grandparents, great grandparents and guardians can buy bonds for the under 16s.

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