Premium Bond holders could have more than doubled their money elsewhere, says expert

Premium Bonds are a savings product by NS&I, but instead of getting interest back on your money, you are entered into a monthly prize draw

Premium Bond holders who have never won a prize could have more than doubled their money elsewhere, according to analysis.

The average amount saved in Premium Bonds by someone who has never won is £128.91, while the typical length of time unsuccessful bonds are held for is 8.1 years.

But new analysis by AJ Bell shows that over this time, that £128.91 could have grown 17% in cash savings into an average of £150.82.

However, if they’d invested that money into a global tracker fund for that period, that £128.91 could have grown by 162% to £338.30.

If the person had started with £5,000, this would have grown into £5,850 in cash savings, or £13,122 if the money was invested.

In the last 8.1 years, prices rose 47.9%, so they would need £191 to have the same spending power today. There are 14.3 million holders who have never won a prize – 62% of all of those with Premium Bonds.

More than 22 million people currently have Premium Bonds and officially, the odds of a single £1 bond winning are 22,000 to 1.

Premium Bonds are a savings product by NS&I, but instead of getting interest back on your money, you are entered into a monthly prize draw.

The smallest monthly prize is £25, and the biggest is £1million. There are usually two £1million prizes given out every month, versus thousands of smaller prizes.

The maximum you can have saved in Premium Bonds is £50,000 and for every £1 invested, you get a unique bond number.

Sarah Coles, head of personal finance at AJ Bell, said: “The bonds don’t pay any interest, so if you don’t win, you don’t get a return on your money. It means that over time, you’re losing spending power after inflation, and the impact can be shocking.

She added: “There will always be people who love Premium Bonds, and there will be those who have never won but still cling to the hope that their lucky day might be around the corner.

“However, if you’ve left money in these bonds for years, it’s worth considering how much you’ve won overall, and asking yourself whether you have kept pace with inflation, or whether your money could be working harder for you in savings or investments.”

You can use the NS&I online prize checker tool, or the Premium Bonds prize checker app, to see if you have won.

An NS&I spokesperson said: “Premium Bonds are a fun way to save and offer customers the certainty of getting back the full amount they put in, along with the chance to win tax‑free prizes every month.

“By contrast, the value of some other forms of investments can go down as well as up, and investors may get back less than they originally invested.