How Premium Bonds prizes are calculated – could you increase your chances of winning?

Martin Lewis gives updated advice on premium bonds

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Premium Bonds allows Britons to save between £25 and £50,000 by purchasing £1 bonds which will then be entered into the monthly draw. Each month, millions of customers win varying amounts from £25 to the £1million jackpot but how are the prize amounts allocated and could Britons increase their chances of winning big?

NS&I notes on their website that the split the Premium Bonds prizes into three separate categories based on their value. 

Higher value prizes include the following prize values:

  • £1million
  • £100,000
  • £50,000
  • £25,000
  • £10,000
  • £5,000

Medium value prizes include:

  • £1,000
  • £500

Lower value prizes include:

  • £100
  • £50
  • £25

The number of prizes given out on each value band depends on the amount that has been collected in the prize fund. 

Ultimately, the reason Premium Bonds can have this lottery style monthly draw is because the savings method does not offer savers an interest rate like normal products.

What would have been given to savers as interest is instead compiled into the prize fund. 

Because of this process, the exact amount of prizes and the number of different prizes given out each month may differ. 

The different bands are allocated a different percentage of the prize fund, with both the medium and high value prizes receiving five percent while the lower value prizes make up 90 percent. 

The number of individual prize amounts given out is then calculated from highest to lowest value, with two £1million being paid out every month and any shortfall or extra being taken into the following band if necessary. 

NS&I have noted that if there is a shortfall in the total number of prizes allocated in a given month, an unlikely event, they will likely increase the percentage given to lower value prizes and reduce the number of high and medium prizes given out. 

In total there are usually around 3,300,000 prizes given out each month. 

In January 2022, 3,352,872 prizes were given for a total amount of winnings at £96,395,075. 

However, in February there were 3,370,576 prizes for a total of £96,904,000, showcasing the potential difference in each monthly draw.

One common rumour found when researching the chances of winning specific prizes from Premium Bonds is that recently bought Premium Bonds have better chances of winning bigger, however NS&I have discredited this rumour. 

The Premium Bonds product dates back to the 1950s, but over 95 percent of the currently eligible bonds have only been bought since the year 2000, which may be a good indication of why the winnings are slightly skewed to newer bonds. 

Additionally, the winning bond numbers are generated by NS&I’s machine nicknamed ERNIE – Electronic Random Number Indicator Equipment.

The machinery ensures random numbers are generated each time a draw is done as it does not store any numbers nor is there a way for bond numbers to be “left out” of the draw. 

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