National Savings and Investments (NS&I) are one of the most popular forms of savings in the UK, but could you gift Premium Bonds as a last minute Christmas present?
Hitting the shops on Christmas Eve is never fun, so give the crowds a swerve this year and consider giving Premium Bonds as a last-minute present instead. It could be the gift that keeps on giving.
You can’t buy Premium Bonds on behalf of other adults, but you can buy them on behalf of children under 16 – whether that’s your own child or the child of a friend or family member. Premium Bonds can be an excellent way to start a savings habit, and the monthly prize draw also means they are good fun.
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Each Premium Bond is worth £1, but the minimum investment amount is £25. Savers can hold up to £50,000 in Premium Bonds in total, making them the perfect gift for a broad range of budgets.
If you are buying for a close friend’s child, a £25 gift could be the perfect amount. Alternatively, if you are looking to give money to your own children – perhaps to reduce your inheritance tax liability – you have the option of buying hundreds or even thousands of pounds worth of bonds.
Premium Bonds bought today won’t be eligible for the first prize draw until February, but you can still include a note in your Christmas card to let the recipient of the gift know how many bonds you have bought and when they will first be entered.
How do Premium Bonds work?
Premium Bonds don’t operate like a usual savings account or bond. Instead, bondholders are entered into a monthly prize draw for the opportunity to win prizes worth between £25 and £1 million.
Premium Bonds are managed by the state-owned savings bank, NS&I. This means they are backed by the government, making them completely secure.
There is no guaranteed interest on Premium Bonds but NS&I does set a prize fund rate, which helps it decide how many prizes to pay out each month. This has been falling in recent months after peaking at 4.65%, as interest rates have come down.
From January, the prize fund rate will be 4%. There are still plenty of prizes up for grabs, though. In total, almost six million prizes will be paid out worth more than £430 million. While the vast majority of the prizes range between £25 and £1,000, two lucky millionaires will be crowned in January’s draw.
As introduced previously, Premium Bonds bought today won’t qualify for the January draw but will be first entered in February. We don’t yet know how many prizes will be paid out in February, but January’s estimates can be used as a rough guide.
| Value of prizes | Number of prizes in January (estimate) |
| £1,000,000 | 2 |
| £100,000 | 82 |
| £50,000 | 166 |
| £25,000 | 329 |
| £10,000 | 823 |
| £5,000 | 1,648 |
| £1,000 | 17,277 |
| £500 | 51,831 |
| £100 | 2,001,028 |
| £50 | 2,001,028 |
| £25 | 1,815,854 |
| Total number of prizes: 5,890,068 | Total value of prizes: £431,938,050 |
Odds of winning a Premium Bond prize
The odds of winning in the Premium Bonds draw change over time depending on the prize fund rate. In January’s draw, you will have a 22,000 to 1 chance for every £1 bond you hold.
Naturally, the more bonds you hold, the higher your chance of winning a prize. However, in July 2004, one lucky bondholder won the £1 million jackpot holding just £17 in Premium Bonds.
How to buy Premium Bonds
You can buy Premium Bonds through the NS&I website, over the phone, or by post.
To apply over the phone, call NS&I for free on 08085 007 007. To apply by post, print and complete an application form and return it with a cheque payable to NS&I. Further instructions and the application form can be found on the NS&I website.
If you are looking to purchase the bonds before Christmas, the online option is probably your best bet.
If you are applying on behalf of someone else’s child, there are some considerations you should bear in mind. NS&I says you should make sure the parent or guardian is happy to look after the investment for the child, and agrees to you giving out their details.
NS&I will also need to check and confirm the identity of everyone on the application. This means they might be in touch with the parent or guardian to ask for evidence of identity documents.
If you want to personalise the gift, NS&I even allows you to get a free gift card where you can include a message. You can choose to receive this by post or electronically. However, it is important to note that it is now too late to get this in time for Christmas.
You can still buy Premium Bonds for a child right up to Christmas Eve using the online option, however the purchaser will not receive the email gift card or postal version until after Christmas. As an alternative, you could consider writing your own card telling the recipient the value of the gift you have bought.
How do Premium Bonds work for children?
Until the child turns 16, the parent or guardian named on their application looks after their bonds, regardless of who bought them. Over 84,000 Premium Bond accounts were opened for under-16s in 2024.
Premium Bond prizes are tax-free, and there is flexibility in how they are managed. They can be automatically reinvested to buy more bonds, transferred into an NS&I Direct Saver or Junior ISA account, or paid into a nominated bank account on the child’s behalf.
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