Despite the low interest rates used to calculate a prize fund, Premium Bonds from National Savings & Investments are often a very popular financial product.
Combining financial security with the opportunity to win a prize, many investors view them as a good alternative to cash savings. They can certainly be more fun!
This month sees the 250 millionth Premium Bonds prize selected by ERNIE, the winning numbers generator. To coincide with this milestone, NS&I has published details of five myths surrounding Premium Bonds.
Myth 1: You have to have £30,000 invested to win the jackpot
Jackpot winners have had different amounts invested over the years – one winner of the £1 million jackpot only had £17 in Premium Bonds! It is true though, that the more Bonds you hold, the better your chances of winning.
Myth 2: Only new Bonds win prizes
Each £1 Bond has an equal chance of winning, regardless of when or where it was bought. Several winners in June’s jackpot draw were bought in the early years that Premium Bonds were on sale. For example, in this month’s draw a prize of £1,000 was won with a Bond bought in 1970. Bonds bought more recently may seem to win more often because there are more new Bonds than old.
Myth 3: Old Bonds are left out of the draw
Winning numbers are generated randomly and then matched against eligible Bond numbers afterwards – numbers aren’t entered into or stored in ERNIE so there’s no way that any Bonds can be left out of the draw. Even Bonds bought as far back as 1956 may still be eligible for the draw.
Myth 4: Only Bonds from the South East win prizes
If it seems that more prizes are won by holders in the South East, that’s because there are more Bonds held there compared with the rest of the UK.
Myth 5: The more people that buy Bonds, the more my chances of winning are reduced
Not at all. The prize fund for each draw is a month’s interest on all eligible Bonds in the draw, so the more Bonds we sell, the bigger the prize fund.
Photo credit: Flickr/ejbaurdo
