Premium Bonds swap interest for a monthly tax-free prize draw. Enter your holding and the prize fund rate to see your expected annual winnings, the effective return, and how it stacks up against a normal savings account.
NS&I · max holding £50,000
Premium Bonds are a savings product from NS&I, backed by HM Treasury, so your capital is 100% secure. Instead of paying interest, every £1 bond is entered into a monthly prize draw. The prize fund rate represents the average return if winnings were spread evenly across all bonds — but because it's a lottery, your actual winnings vary.
| Holding | Expected annual prizes (3.6%) |
|---|---|
| £5,000 | ~£175 |
| £20,000 | ~£700 |
| £50,000 (max) | ~£1,800 |
The big draw is that prizes are completely tax-free and don't touch your Personal Savings Allowance. For higher and additional-rate taxpayers who've used up their allowance, the tax-free return can beat a taxed savings account. For most basic-rate savers, a top easy-access account or ISA usually pays more reliably. Compare guaranteed growth on the savings calculator or a fixed-rate bond.
The prize fund rate — around 3.6% — is the average payout across all bonds. An average holder of the £50,000 maximum might expect roughly £1,800 a year, though most win less than the average.
Each £1 bond has about a 1 in 22,000 chance per monthly draw. More bonds means more entries, so larger holdings win more consistently.
Yes — completely tax-free, and they don't use your Personal Savings Allowance, which is why they suit higher-rate taxpayers.
Yes. NS&I is backed by HM Treasury, so 100% of your capital is secure — you can cash in any time, though you only get back what you put in plus any prizes won.
