There are many different places that you can put your money and premium bonds is one that many people like the idea of using. However, it is good to think about whether they will be the right choice for you. They do have a selection of advantages and disadvantages and it is well worth knowing what there are before you decide whether they are a good idea for you.


  • Backed by HM treasury so your money is safe and secure
  • Gives you the chances of winning lots of prizes up to a million pounds
  • You can take your money out instantly
  • You only need £25 to open an account and can add in £25 or more amounts until you have £50,000 total in there
  • No tax to be paid on any returns
  • Better odds of winning a prize than the lottery


  • Return can be low particularly if you have a small holding as odds are low that you will win
  • There are limited prizes so you may not get any return at all
  • Can only pay in £25 or above so if you only have a small amount you will not be able to put it in

You will therefore have to think about whether the advantages outweigh the disadvantages. It may look like there are more advantages but this does not mean that it will really suit you. Consider how much you have to pay in as this is a key factor. It is the case that people with larger holdings are much more likely to win a prize. This is because the odds of winning tend to be 1 in 25,000 so if you have 25,000 bonds (each bond costs £1) then you will be likely to win one prize a month. Therefore, if you have less than this, chances are that you will less often. If you have a very small amount of bonds, then you may never win. Of course, each bond has the same chance of winning which means that you can win, but by buying more bonds you greatly increase the chances that you will win.

As an alternative to buying lottery tickets it can be a great account to have though. Consider, how much you spend on these and think about how much better it could potentially be if you used the money to buy premium bonds instead. You would still be entered in a draw and potentially win a prize, but you will be able to get the money back that you spent on it. As you have to deposit a minimum of £25 you may need to save up a bit of lottery money, perhaps buy bonds once a month or even once every few months, but it can give you better value as you will still get something back.

You should consider though, that there may be other ways to save money that will give you a better return. There are many savings accounts that will give you a guaranteed return each month and that could be a better option. You have to think about how much risk you are willing to take and whether you would rather have the chance of winning a significant amount or whether you would prefer to ensure that you have some interest even if it is less than you would get if you won a prize. You will be taxed on this interest too, so that may have a bearing on it, especially if you have already used up the allowance you have for non-taxed interest per year.

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