What Is a Premium Bond?

What Is a Premium Bond?

By Charles Joseph | Editor, Financial Affairs
Reviewed by Corey Michael | Senior Financial Analyst

A Premium Bond is a type of lottery bond sold by the UK’s National Saving and Investments agency. Instead of getting regular interest payments like a regular savings bond, every premium bond you have enters you into a monthly prize draw. Each bond has an equal chance of winning. The draws can yield various cash prizes, including a million-pound jackpot occasionally. It’s a unique way of saving money as it offers the potential for significant returns, but there’s also a risk that you may not win anything and simply earn no interest on your investment.

Related Questions

1. Are Premium Bonds a good investment?

Whether Premium Bonds are a good investment or not, largely depends on your financial situation and goals. If you’re simply looking to save with a chance to win, they can be a fun choice. However, they might not be the best choice if you’re looking for a guaranteed return on your investment.

2. How much can you win from Premium Bonds?

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You can win anything from £25 to £1 million in a monthly prize draw. The number of prizes changes from month to month, but there are millions available.

3. Can you lose money on Premium Bonds?

No, you can’t lose the money you put into Premium Bonds. However, their value can be eroded over time by inflation if you don’t win any prizes.

4. Can anyone buy Premium Bonds?

Anyone over the age of 16 can buy Premium Bonds. Parents, guardians, and (great) grandparents can also buy them for children under 16.

5. How can I buy Premium Bonds?

You can buy Premium Bonds from the National Savings and Investments agency. You can purchase them online, by phone, or through the post. The minimum purchase is £25, and the maximum you can hold is £50,000.