If you’re lucky enough to have some spare cash lying about you have a range of options about where you can park your money.
You might want to give Premium Bonds a go.
What are they?
Premium bonds are a savings product issued by National Savings and Investments (NS&I), a state-owned savings bank in the UK. But unlike other investments, where you earn interest or a regular dividend income, with premium bonds you get entered into a monthly prize draw where you can win between £25 and £1 million tax free. Quite simply the more of the bonds you have, the more chance you have of winning a cash prize.
They were first introduced in 1956 and are now the most popular savings product in the UK owned by around 21 million people.
Now there’s even more reason to choose premium bonds because NS&I will increase premium bonds’ prize rate to 4% from next month, taking it to its highest level since 2007. It’s the second rise in as many months, having gone up to 3.7% in July.
It also means that bond holders’ chances of scooping a winning prize are now at their best for 15 years, going from 24,000:1 to 22,000:1.
Sarah Coles, head of personal finance, Hargreaves Lansdown said: “Your chances of a big win on Premium Bonds just got better. Hot on the heels of boosting the prize fund in July, NS&I will do it again in August, but this time the odds will shorten as well. It means you have a 1 in 22,000 chance of taking home a prize. It’s a boost for over 22 million people with bonds – and may well attract even more savers in the coming months.”
However, as always, there’s a catch.
What’s the catch?
Coles said: “Anyone considering snapping up Premium Bonds needs to understand the price they pay. In an average month a typical bond holder will win nothing, and unless you’re unusually lucky you won’t get close to a return of 4%. While interest rates are higher, you’re missing out on more interest elsewhere by opting for Premium Bonds. And while inflation is running so high, the spending power of your money is being eroded faster.”
She added: “However, there will be plenty of people who think this is a price worth paying for the chance of winning a life-changing sum of money. You could be one of 1,310 people in August who win £25,000 or more – or one of two to take away £1 million. And we know that this is enough to keep people coming back for more.”
With the chances of winning getting even better, Britain’s most popular savings product is sure to gain even more fans.
