Premium Bonds

Premium bonds were introduced in 1966. Interest is not paid to investors directly. Instead it goes into a prize draw and the holders of the bonds are eligible for the prizes. Today 89 million people hold at least one bond.

Most prizes are £100 but the top monthly prize is now £250,000 and there are weekly prizes of £100,000, £90,000 and £150,000.

Although the premium bond is a lottery, your capital is not at risk. You can withdraw your investment intact at any time. The lottery simply determines how the interest is shared out. At the moment, the total premium bond investment earns interest annually at 7%.

That amounts to over £11 million a month. Every bond has a fixed chance of 11,000 to 1 in each draw of winning something.

So if you have £100 invested, you have a chance of 110 to 1 each month and will, on average, win something every nine years or so. Of course, if you had the maximum £10,000 invested, you could expect on average to win something almost every month.

Other pages of interest - Tax Makes Premium Bonds Comparable

or Interest Paid Gross

Tax Makes Premium Bonds Comparable

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