Savings warning issued as Britons may ‘not win anything at all’ from Premium Bonds

Martin Lewis gives updated advice on premium bonds

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Premium Bonds is a savings option managed by National Savings and Investment (NS&I), a financial institution which is managed by the Government. Unlike other savings products where interest is acquired over time, those with Premium Bonds are enrolled in a prize draw which could see them win up to £1million. Among the other cash prizes people can win through the savings account are £100,000, £50,000 or £25,000, with smaller payouts also up for grabs.

As it stands, the annual prize fund rate for Premium Bonds is set at one percent, but this is subject to changes in the wider economy.

This means the odds of winning per £1 Bond number currently stand at one in 34,500.

Rachel Springall, a finance expert from MoneyFacts.co.uk, spoke exclusively to Express.co.uk about how savers should view Premium Bonds in light of the cost of living crisis.

Ms Springall explained: “As it stands, inflation (the Consumer Price Index rate) is seven percent and rising inflation erodes the spending power of savers’ cash if their pots are not earning an interest rate that can surpass the inflation rate.

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“The NS&I premium bonds are not protected by the eroding power of inflation.

On whether Premium Bonds are a worthwhile investment during the cost of living crisis, Ms Springall noted the importance of savers realising the type of product they are investing into.

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She added: “Premium bonds could be a useful savings vehicle for those looking for a chance to win the prize draw.

“But savers can also cash in their bond at any time, which may be ideal for those who may need their money back amid the cost of living crisis.

“NS&I currently has an annual prize fund rate of one percent and the odds of any £1 Bond number winning any prize is 34,500/1.

“But savers may not win anything at all and instead, could have had their money in a savings account earning interest.”

With a wide variety of savings products available on the market, and with banks recently hiking their interest rates, savers now have more options to choose from to boost their finances.

According to the financial expert, those looking for the best deals will be able to shop around the UK’s different banks to find the one that is right for them.

Furthermore, she shared what she believes will be the best savings deals going forward for those looking for something different to Premium Bonds.

Ms Springall said: “If savers are considering alternatives to NS&I’s Premium Bonds, there are prize draws with Nationwide and Halifax, (Halifax will also be doing superdraw in June).

“But ultimately NS&I is a Government-backed brand and could be a trusted safe haven to invest their cash.

“As an alternative, Yorkshire Building Society offers a ‘Make Me A Saver’ account, a fixed term regular savings account that pays one percent variable, savers can deposit up to £150 a month, and each month, ten winners will be picked to each win £1,500 (they must save at least £50 a month).”

Those interested in getting a Premium Bonds savings account can apply via the NS&I website.

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