What Are Premium Bonds?

Premium Bonds are a savings product offered by National Savings and Investments (NS&I), the U.K. government’s savings bank. Unlike traditional savings accounts that pay interest, Premium Bonds give you the chance to win tax-free cash prizes through a monthly draw. This makes them more like a lottery, but without the risk of losing your initial investment.

Each Premium Bond costs £1. You have to buy a minimum of £25 worth of bonds, and you can own a maximum of £50,000 in Premium Bonds (50,000 bonds). Every £1 bond you own has the same odds of winning, which is 22,000 to 1.

Premium Bonds are backed by the U.K. government, meaning they are a secure way to save. While there is no guaranteed return, they remain a popular choice for those who prefer the possibility of winning prizes over earning fixed interest.

When you buy Premium Bonds, each £1 bond is assigned a unique number that is entered into a prize draw every month. The more bonds you hold, the more chances you have to win. If you only own £25 worth of bonds, the chances of winning are slim. But if you own £50,000 worth, the chances are you’ll likely win at least one cash prize each month.

You don’t earn interest with Premium Bonds. You get a return on your money if you win cash prizes in the monthly prize draw. The annual prize fund rate is 3.8%, which is the average percentage of the total value of Premium Bonds paid out each year.

You may want to look at other savings accounts that pay interest. Trading 212’s easy-access cash ISA, for example, pays 4.5% interest. This is tax free as it’s an ISA. Or if you’re saving for the long term, you may want to consider investing the money in the stock market for the potential of a better return.

Despite the odds being low of winning a prize if you only hold a small amount of Premium Bonds, never say never. In the March 2025 Premium Bond prize draw, a lucky person scooped the £1 million jackpot with a holding of just £100 in Premium Bonds.

NS&I publishes details on its website of the high value winners each month about a day before holders are notified about whether or not they have won that month.

The winning numbers are generated by ERNIE (Electronic Random Number Indicator Equipment) which has been drawing Premium Bond prizes since 1957. The current version, ERNIE 5, was introduced in 2019 and uses quantum technology to generate its random numbers.

Two £1 million prizes are paid out each month. There are then around 80 prizes of £100,000 paid out and around 160 of £50,000.

Other prize amounts are £25,000, £10,000, £5,000, £1,000, £500, £100, £50 and £25.

You stand the most chance of winning a lower value prize of £100 or less, as these account for 80% of the total prize fund. More than 1.8 million £25 prizes are given away each month.

Take a look at the volume and value of the individual prizes on a recent monthly draw.

Premium Bonds: Chances of winning and estimated annual returns by amount

Your chances of winning with Premium Bonds depend heavily on how much you hold. The table below shows the estimated probability of winning at least once in a year, along with typical annual prize payouts for different holding amounts. These figures are based on NS&I’s prize fund rate of 3.80% and historical averages. Keep in mind that outcomes can vary significantly, especially with lower bond amounts where winning is far less likely.

Disclaimer: These figures are estimates based on average outcomes and do not represent guaranteed returns. Premium Bonds do not pay interest, and your winnings depend entirely on the outcome of random monthly prize draws. Actual results may differ, particularly for smaller holdings, where many bondholders may win nothing in a given year.

Premium Bonds were launched by the government in 1956 to encourage people to save post-war and provide the government with money to help it get back on its feet. You could own a maximum of £500 in Premium Bonds and the top prize back then was £1,000.

The first ever £1 million Premium Bonds jackpot was launched in 1994 and more than 500 Premium Bond millionaires have been made since that time.

“Agent Million”, an employee at NS&I, visits the lucky jackpot winners in person each month to deliver the happy news. There are around five Agent Millions working at NS&I, and very few people know their names.

I have been lucky enough to speak to an Agent Million before who told me they find “incredible joy” in doing the job and being able to pass on such happy news to unsuspecting holders.

You buy Premium Bonds directly through NS&I, whether online, over the phone, or by post. You have to be over 16 to buy Premium Bonds yourself, but parents can buy them for children younger than 16.

Where to buy Premium Bonds

You can buy Premium Bonds with a debit card through the NS&I website, or over the phone by calling 08085 007007.

Premium Bonds can also be purchased via a written cheque addressed to NS&I for the amount you’d like to buy. Just print out an application form and send it to the following address: NS&I, Sunderland SR43 2SB.

The Premium Bond prize draw takes place every month. The dates for 2025 are 2 April, 2 May, 3 June, 2 July, 4 August, 2 September, 2 October, 4 November, 2 December.

If you have the Premium Bonds Prize Checker app, you can tell if you’ve won a prize in the monthly draw after the first working day of the month.

You’ll also be notified by email if you’ve won, although there is typically a delay of around a few days. You can also check the prize checker page on the NS&I website. You don’t need to log in; you just need your holder number (this can be found on any letter from NS&I about your Premium Bonds or by logging into your online account).

If you win money with Premium Bonds, you have two options: you can either reinvest your winnings to buy more bonds or have the cash paid to a bank account nominated by you.

However, If you already own the maximum £50,000 in Premium Bonds, you won’t be able to buy more. In this case, any winnings will be automatically paid into your bank account.

One advantage of Premium Bonds is that your money isn’t locked in. You can ‘cash in’ your Premium Bonds at any time if you’d prefer to save or invest elsewhere. To do this, you’ll need your holder’s number and bank account details. The process can be completed online, even if you don’t have an online account.

Elizabeth Anderson has been a financial journalist for more than a decade. She’s written for major national newspapers, contributed to corporate reports and research, and reviewed dozens of share dealing platforms, SIPP providers, ISAs, and brokerage firms. Elizabeth started her career at Bloomberg and has worked for the BBC, The Telegraph, The Times and the i newspaper. She is passionate about helping people understand finance and investing. A keen investor herself, Elizabeth invests through general dealing accounts, ISAs and several SIPPs.

Steven Hatzakis is a well-known finance writer with 25+ years of experience in the foreign exchange and financial markets. He is the Global Director of Online Broker Research for Reink Media Group, leading research efforts for ForexBrokers.com since 2016. He has served as a registered commodity futures representative for domestic and internationally-regulated brokerages. Steven holds a Series III license in the US as a Commodity Trading Advisor (CTA).

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