Millions of Premium Bonds holders are seeing no returns on their savings as the vast majority have never won a penny from the popular savings product, data suggests.
Around 63% of people who have Premium Bonds (almost two-thirds) have never won a single prize in NS&I’s monthly prize draw, a Freedom of Information (FOI) request by AJ Bell revealed.
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The average holding among those who have never won a prize is just £106.79, according to NS&I data. Meanwhile, the average holding for those who did win was £23,397, a separate FOI found in April.
Premium Bond prizes are drawn randomly, with each £1 bond having a 22,000 to 1 chance of winning a prize between £25 and £1 million.
With the cash ISA limit set to be cut from £20,000 to just £12,000 for the under-65s in April 2027, savers will be looking for new ways to maximise their tax-free savings. We look at whether Premium Bonds could be the answer, and whether they are worth it.
Are Premium Bonds worth it?
Premium Bonds remain extremely popular because of the allure of the £1 million jackpot, even though most people don’t win a prize and even fewer will win anywhere near enough to become a millionaire.
In 2025, a total of 71,722,056 prizes were dished out to Premium Bond holders, worth a combined total of almost £5 billion.
Meanwhile, in the 68 years since they have existed, a total of 803 million Premium Bond prizes have been drawn, distributing about £39 billion to UK savers.
But AJ Bell’s data shows that these prizes are disproportionately awarded to repeat winners who tend to have a significant amount saved in Premium Bonds, as the more you save the more likely you are to win.
This means that, for many people who do not get lucky, Premium Bonds may not be worth it, as the money they hold in them will slowly be eroded by inflation until they win a prize, as NS&I does not pay any interest on Premium Bond balances.
Instead, they could be better off with guaranteed growth on their cash in one of the best savings accounts on the market instead, earning up to 4.55%.
However, while their money would be growing at a consistent rate in a savings account, they would remove their chances of winning up to £1 million in a Premium Bond prize draw.
Laura Suter, director of personal finance at AJ Bell, said: “Those 13.7 million people with a balance under £100 represent over 60% of all holders, but only 0.1% of all the money held in Premium Bonds.
“In contrast, just 5% of holders have the maximum £50,000 balance, but they account for 50% of the total value of all Premium Bonds in circulation.
“Put simply, if you’re one of the millions of people with a small amount of money in Premium Bonds, the odds are stacked against you.”
Should you put money in Premium Bonds after using up your cash ISA allowance?
The cash ISA limit will be cut to just £12,000 for savers aged under 65 from April 2027, chancellor Rachel Reeves announced in the Autumn Budget.
The change means that savers will no longer be able to put their full £20,000 annual ISA allowance into cash. Instead, to make the most of the tax wrapper, they will need to put the remaining £8,000 into a stocks and shares ISA.
As the move will limit the amount you can put into a cash ISA, many savers who favour the risk-free nature of cash will be searching for other places to save without having to pay any tax on their savings income.
Premium Bonds could be the answer to this. Customers are able to save up to £50,000 in the savings vehicle, and any prizes they win are entirely tax free – even the £1 million jackpot.
The obvious downside of putting money in Premium Bonds is that you are not guaranteed to win any prizes.
However, as those who put more money into Premium Bonds are more likely to win prizes, people with a significant amount of money to save each year (such as those who max out their ISA allowance) are more likely to get lucky and win prizes.
It means that, under certain circumstances, Premium Bonds could be worth it if you are a saver with a lot of money who does not want to pay tax on their savings but does not want to invest in stocks and shares.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: "The fact that prizes are tax free means Premium Bonds will hold some appeal for people looking for an alternative tax-efficient home for cash after the cash ISA limit is cut.
“However, you need to go in with your eyes open, because if you don’t win anything, then it doesn’t matter how tax efficient the prize would have been."
Should you give a child Premium Bonds?
One of the benefits of Premium Bonds is that you can gift Premium Bonds to your or a loved one’s children.
However, Suter at AJ Bell suggests this may not be the best use of your money as small pots have very low chances of winning.
“Premium Bonds have long been perceived by parents and grandparents as a safe store of a few quid, often gifted when a child is born or for birthdays in the hope that they could be one of the lucky winners of one of the top prizes,” Suter said.
“Unfortunately, unless they are saving large amounts they’re unlikely ever to see that dream become a reality, and may not earn any return whatsoever.”
Those who want to give money towards a child’s future shouldn’t hope for the best with Premium Bonds, Suter suggests. Instead, it may be worth considering opening a Junior ISA and regularly putting money into it to grow.
With a Junior ISA, parents, relatives and friends can invest up to £9,000 a year in either cash or stocks and shares, with the money being in the child’s name.
Like other types of ISAs, any gains or interest earned is tax-free.
Suter said: “A parent who had put just £25 a month into the MSCI World index of global companies 18 years ago when their child was born would be handing them £17,700 on their 18th birthday. In other words, that translates to a meaty annualised return of 10.1%.”
She added that while many people may feel uncomfortable at the prospect of putting money into the stock market for their child, “history shows that over the long term investing, even in something low maintenance such as a global tracker fund, can outpace cash and inflation”.
Suter caveated that this does not mean that everyone should ditch safer assets like bonds, or stop saving in cash. However, she pointed out that as investments in a Junior ISA could be held for as long as 18 years, “there’s less reason for them to hold cash savings”.
“Ultimately, you need to feel comfortable investing on behalf of a child before making the leap, so it’s important to understand what you’re investing in before doing so,” she added.
What are Premium Bonds?
Premium Bonds are one of the country’s most popular savings vehicles, with about 23 million people holding money in them.
One of the reasons for their popularity is that instead of earning a set interest rate like you would with other savings accounts, you are instead entered into a monthly prize draw with the chance to win between £25 and £1 million.
If you win the jackpot, you’ll be paid a visit by ‘Agent Million’ to inform you of your newfound fortune. Meanwhile, other winners can check for Premium Bonds prizes online.
For every £1 you have invested in Premium Bonds, you get one chance to win a prize. In December’s Premium Bonds prize draw, the odds of winning were 22,000 to 1 for each pound put into the savings vehicle.
You do not need to pay any tax on the prizes that you win from Premium Bonds holdings, and you can save up to £50,000 in them.
