Why you’re ten times more likely to win £100,000 on Premium Bonds

More than 66 years after their launch, Premium Bonds are by far the most popular savings deal in the UK. Nearly 22.4 million of us enter the monthly prize draw – that’s a third of the UK’s total population.

And last year, two major changes to National Savings and Investments (NS&I) gave savers even more reason to invest.

The first change this year was an unprecedented increase in the number of prizes on offer from £100,000 and £50,000.

During the May 2022 draw, there were only six prizes paying £100,000 and eleven prizes paying £50,000. By the most recent drawing of April 2023, these prizes had increased tenfold, with 62 paying £100,000 and 125 paying £50,000.

These are the biggest prizes paid out after the two £1 million jackpot wins available each month.

As always you can invest from as little as £25 all the way up to £50,000 and there’s no risk of losing your stake – it’s fully protected by a Treasury backed guarantee.

The second big change is an increase in the underlying rate paid to Premium Bond savers – expanding the prize fund and increasing the chances of each £1 winning a prize every month.

Around this time last year, the underlying rate — or average price payout per year — was 1 pc. Today it is 3.3 percent.

And the odds of winning a prize in each monthly draw, as chosen by supercomputer Ernie 5, have dropped from 34,500 to 1 to 24,000 to 1.

All of this has been a recipe for more money to deposit in Premium Bonds, despite a lot of competition from savings rates finally rising at banks and building societies.

At the April 2023 draw, there was almost £120.5bn of cash in Premium Bonds, up from £117.8bn in April 2022 and £86.1bn in March 2020.

That means a 40 percent increase in Premium Bonds has flown in just three years. So how much luck do you need to win big with Premium Bonds?

Your route to winning £1 million

“I never win anything and I only quit my job last week. Are you sure Ant and Dec won’t come through the door and say it’s all a joke?’

That’s what a £1 million winner told NS&I this month after being told by Agent Million (the staff member tasked with breaking the news) about their life-changing sum of money.

Since NS&I first introduced the £1 million top prize in 1994, it has created 504 Premium Bond millionaires. And since August 2014, there are two £1 million prizes in each draw.

Today, the remaining prizes available are as follows: £25 (2,145,328 prizes); £50 (1,409,059); £100 (1,409,059); £500 (39,744); £1,000 (12,248); £5,000 (1,246); £10,000 (622); £25,000 (249); £50,000 (125) and £100,000 (62).

There have been special draws with more than one £1 million jackpot on offer – one in December 2006 and one in June 2007, each producing five millionaires, to mark the 50th anniversary of the sale of Premium Bonds and of the first draw respectively to celebrate.

The chances of winning £1 million have increased over the past year. According to NS&I data analyzed by Money Mail, the average Premium Bondholder currently has £5,250 invested in the bonds.

A year ago, someone with £5,000 holdings had a 1 in 11.78 million chance of winning one of the £1 million prizes within a month.

That has been extended to 1 in 12.05 million. Those with the maximum £50,000 invested have a 1 in 1,204,502 chance of winning £1 million, compared to 1 in 1,178,198 a year ago.

Over the last 12 months, the average holdings of the 24 people who won the top prize was £34,876. Nine of these winners – or just over a third – had invested the maximum £50,000.

However, one winner hit the jackpot in February with just £3,000.

In January someone won the top prize with £4,625. So smaller companies can still gain a lot.

The bigger prizes on offer

There is much better news for your chances of winning £50,000 or £100,000 as the number of these prizes has increased dramatically.

Someone with £5,000 now has a 1 in 388,548 chance of winning £100,000, compared to 1 in 3,927,324 a year ago.

They now have a 1 in 192,720 chance of winning £50,000 compared to 1 in 2,142,180 a year ago.

Someone with the maximum holdings of £50,000 now has a 1 in 38,855 chance of winning £100,000, compared to 1 in 392,733 a year ago.

They have a 1 in 19,272 chance of winning £50,000 compared to 1 in 214,218 a year ago.

So while it’s harder to hit the jackpot, the changes have greatly increased your chances of winning what is still a potentially life-changing sum of money.

Our analysis of this month’s draw shows that the average holding to win one of the 62 £100,000 prizes was £37,298.

Of those winners, 23 had £50,000 worth of Premium Bonds, meaning 37 per cent of them had the maximum investment.

Only two winners of a £100,000 prize pool had invested less than the average £5,250: one was a bondholder from Wandsworth, south London, whose £1,000 invested produced an effective return of 9,900 per cent.

The other was a winner from Cleveland, Yorkshire, who had invested £5,004. That equates to a return of 1,988 percent.

According to Savings Champion’s Anna Bowes, the move to offer more big prizes to bondholders is taking the crowds around the monthly draw up a notch.

“Essentially, they are Lotto-like prizes, but without the risk of losing your bet,” she says.

Underlying returns have been increased by having more of the larger prices, and eliminating some of the smaller ones.

A year ago there were 3,324,584 prizes paying out £25. NS&I has slashed these smaller prizes massively, with 2,145,328 remaining in the most recent draw.

Still looking at savings deals

The underlying yield of 3.3 percent on Premium Bonds is a bone of contention for many savers.

If you had saved £5,250 (the average in Premium Bonds) in a standard savings account with a bank or building society, a rate of 3.3 per cent would yield £173.25 in interest over the course of a year.

But that is not a guaranteed interest rate. Since the draw is randomly generated by NS&I’s ERNIE computer, it is perfectly possible to never win a prize.

With £5,250 you have a 36.9 per cent chance of returning £175 during the year and a 7.24 per cent chance of returning nothing at all, even with the increased rate on offer.

All the prize percentage really means is that for every £100 deposited in bonds, only £3.30 will be paid out to medium lucky holders.

Kevin Mountford, co-founder of savings platform Raisin, says: ‘It’s exciting to be in the Premium Bonds draw, but savers shouldn’t put all their eggs in that basket.’

Savers with an easily accessible Yorkshire Building Society account can currently earn 3.6 per cent on the first £5,000 and 3.1 per cent over that, or £192.15 interest over the year.

With a one-year fixed deal, savers can get 4.54 per cent interest from Oxbury Bank, which equates to £238.35 interest.

l.boyce@dailymail.co.uk