When it comes to money, it’s safe to say Martin Lewis has plenty of wisdom up his sleeve – and once again, it’s time to listen up.
In the latest Money Saving Expert (MSE) newsletter, the finance guru weighed in on Premium Bonds, a popular way to save which offers tax-free ‘winnings’ rather than set interest.
More than 24 million people in the UK have Premium Bonds, but according to Martin, the ‘vast majority’ could actually ‘do better’ putting their cash elsewhere.
Essentially, it all comes down to returns.
The National Savings and Investments (NS&I) scheme allows people to buy bonds worth £1 each, with a minimum holding of £25 and a maximum of £50,000.
At the end of every month, each bond is then placed into a draw to win tax-free prizes ranging from £25 to £1million. And while a few lucky folks have become millionaires off the back of their small savings pot, the bottom line is just that: luck.
Are Premium Bonds worth it?
Given the win rate currently sits at 3.6%, Martin says he’s ‘not the biggest fan of Premium Bonds for most people,’ as the typical punter’s money will usually earn more in a high-interest savings account.
There are some caveats though.
If you pay tax on savings and have used up your annual ISA allowance (currently £20,000) Martin claims that the ‘tax-free nature’ of Premium Bonds means they might be worth taking advantage of.
The odds also improve as your holding increases, so ‘provided you’re putting a larger amount in (as you need to do that to have a decent chance of winning closer to the published prize rate), they can be a good option.’
In terms of benefits, MSE notes that since Premium Bonds are backed by NS&I, which is protected by the Treasury, there’s ‘no risk to your capital.’
But there’s no guarantee you’ll win either, so you could effectively ‘earn nothing from putting money’ into Premium Bonds.
The experts add: ‘If you don’t pay tax on your savings interest and have average luck, better interest rates are available from the top easy-access accounts and cash ISAs. Premium Bonds are also unlikely to beat the current rate of inflation.’
The odds of winning with Premium Bonds
Based on the prize breakdown for October 2025, the current odds of winning Premium Bonds are:
- £1 million: 1 in 2,661,934,000 (2).
- £25: 1 in 880 (2,586,082 winners per month)
- £50: 1 in 1,537 (1,698,537)
- £100: 1 in 3,016 (1,698,537)
- £500: 1 in 79,828 (47,913)
- £1,000: 1 in 283,499 (15,971)
- £5,000: 1 in 1,895,965 (1,518)
- £10,000: 1 in 4,127,029 (759)
- £25,000: 1 in 10,026,117 (304)
- £50,000: 1 in 23,453,162 (151)
- £100,000: 1 in 70,050886 (76)
If you do fancy trying your luck, you can place up to £50,000 in Premium Bonds completely tax-free, with the average yearly prize rate currently standing at 3.6% (although you could come away with a higher or lower return).
You’ll need to be over the age of 16 to buy them, but it’s also possible to buy Premium Bonds on behalf of someone below this age, and then place them under the name of a parent or guardian.
Typically, you’ll need to hold the bonds for a full calendar month before you’re eligible for a win. MSE adds that if you’re moving money over from other savings accounts, you’re best off doing so during the last week of the month.
‘That way you minimise the time the money’s not earning interest and also not in a draw for Premium Bonds,’ its website explains. ‘The exception to this is if you reinvest your prizes – these bonds will be in the draw from the month after you win.’
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