Premium Bonds are one of the most popular savings products in the UK, with over 22 million people in the country holding some of their money in them.
The products, offered by National Savings and Investments (NS&I), are unlike traditional savings products as instead of receiving a guaranteed interest rate, you are entered into a monthly prize draw where you can win between £25 and £1 million.
Any money you may win from the Premium Bonds prize draw has the added bonus of being tax-free.
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However, as individuals can hold a maximum of £50,000 in Premium Bonds, savers may look for alternatives to Premium Bonds to find other opportunities to win through regular prize draws.
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Savings prize draws are easy-access or notice savings accounts, where the money you pay in allows you entry into a prize draw.
Each provider has slightly different eligibility rules, frequency and payout rates for their prize draws. Here are the top Premium Bonds alternatives on offer right now.
Alternatives to Premium Bonds
Chip Prize Savings Account – win up to £10,000
The prize pot: Savers can enter into Chip’s monthly prize draw for the chance to win up to £10,000 a month.
While there is only one grand prize distributed each month, there are thousands of smaller prizes up for grabs, ranging from 14,400 £5 prizes to seven £500 prizes.
And, similar to Premium Bonds, prizes won from Chip’s draw are tax-free.
How it works: With Chip’s Prize Savings Account you don’t earn any interest on your deposits. Instead, the money you deposit counts towards entries in a monthly prize draw. Any prize you win is added to your account.
The number of entries you get to the monthly prize draw is determined by the average balance of your account over the calendar month, with every £10 counting for one entry.
Family Building Society Windfall Bond – win up to £50,000
The prize pot: Family Building Society has a Windfall Bond product that operates a monthly prize draw.
The maximum prize is £50,000 each month, but there are also prizes of £100, £500, £1,000 and £10,000. The building society says the number of lower-value prizes differs month-to-month.
How it works: Newly opened Windfall Bonds qualify for the Monthly Free Prize Draw in the second calendar month after the bond has been opened. For example, a Windfall Bond opened in January would be entered into March’s Monthly Free Prize Draw.
The value of prizes to be paid each month is calculated by taking the total value of Windfall Bonds entered into the previous month’s free prize draw, multiplied by 1% and then divided by 12.
Even if you don’t win a prize, the Windfall Bond pays an interest rate equal to the Bank of England’s base rate, minus one percentage point. Customers can access their money after 35 days’ notice, and you do not need to pay tax on your winnings.
Eligibility: You can open a Windfall Bond online, by post and by visiting Family Building Society’s Epsom branch. Each Windfall Bond requires a £10,000 deposit.
Credit Union PrizeSaver - win up to £3,000
The prize pot: The PrizeSaver draw is a monthly prize draw managed by the Association of British Credit Unions.
It has a top prize of £3,000, with 10 prizes of £100 and 34 prizes of £50 also available each month.
How it works: Every £1 held in a PrizeSaver account gets you one entry into the monthly prize draw, with up to 200 entries per month. If you hold more than £200 in your account you will still get a maximum of 200 entries.
Winnings are tax-free, and whether you earn any interest alongside your prize draw entries is up to your chosen credit union.
Eligibility: The draw is open to people saving in PrizeSaver accounts with their local credit union. You can only have one PrizeSaver account.
Note that not all credit unions in the UK offer a PrizeSaver account. Find out which ones are participating on the PrizeSaver website.
