Martin Lewis reveals whether or not to maintain Premium Bonds as the worth drops to 1%
What would someone with average luck win?
The calculation is complex, but our Premium Bond Probability Calculator calculates your chances of winning using the ridiculously complex multinomial probability (the algorithm was developed by a postdoctoral fellow in cosmology) and has just been updated with the latest price distribution.
Martin explained that the tool currently shows:
- With £ 100 worth of bonds, with average luck, you would win over a year NOW.
- With £ 1,000 worth of bonds, with average luck, you would win over a year NOW.
- With bonds worth £ 10,000, the average luck would make £ 75 over the course of a year (i.e. 0.75% interest).
- With bonds worth £ 50,000, the average luck would make £ 450 over the course of a year (ie 0.9% interest).
In comparison, the top easy-to-access savings account currently pays 0.6%, while a fixed-rate account can earn you anywhere from 0.75% to 1.3%, depending on how long you're willing to lock up your money.
Who are premium bonds best suited for?
The Premium Bond Prize Fund Rate may outperform readily available savings rates, but Martin points out that most people don't win as much and you can make more with fixed savings. Here's when Martin says premium bonds can look better:
- You are better if you save more than 10,000 euros. As Martin said on his show last night, "The more you save the better – over £ 10,000 they look a lot better."
- Better if you save longer but may need access. Martin said, "With fixed income savings, your money is locked away, it's not locked away in premium bonds."
- They really do work for the few who pay taxes on savings interest. Premium bond prices are tax-free – as is savings interest for 95% of people. But as Martin said yesterday: "If you are one of the few people who use up your personal savings, in this case because Premium Bonds are tax-free, that's a big boost for you."
- You're better off if you don't really care. If the main objective is to protect and protect your capital and interest is not a big deal, you may also enjoy the ridiculously small chance of winning big. Martin said, "Some of you say, 'I don't have a lot of money, I'll bring myself to my knees. I don't care about the interest, I just want a safe place to put my money and I like it the thrill of the chance to win a million pounds – even if it's tiny. "Then put your money in premium bonds if you want."
Regardless, it's worth noting that NS&I – which operates Premium Bonds – also announced earlier this month that it is delaying plans to scrap Premium Bonds price checks on paper.