Austerity warning issued as Brits may ‘gain nothing at all’ on premium bonds | Personal Finance | finance
Premium Bonds is a savings option managed by National Savings and Investment (NS&I), a government-managed financial institution. Unlike other savings products where interest is earned over time, those with Premium Bonds are entered into a prize draw where they can win up to £1million. Other cash prizes people can win through the Savings Account include £100,000, £50,000 or £25,000, with smaller payouts up for grabs as well.
Currently, the annual prize money rate for premium bonds is set at 1 percent, but this is subject to changes in the broader economy.
This means that the odds of winning per £1 Bond number are currently one in 34,500.
Rachel Springall, a finance professional MoneyFacts.despoke exclusively Express.co.uk on how savers should view premium bonds in light of the cost of living crisis.
Ms Springall explained: “Currently, inflation (the CPI) is at 7% and rising inflation erodes the purchasing power of savers’ money unless their pots yield an interest rate that can beat inflation.
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“NS&I’s premium bonds are not protected from the erosive power of inflation.
“Someone may be surprised when they win a premium bond award years later, so it’s important that they have their data to hand and by all means use NS&I’s price checker.”
On the question of whether premium bonds are a worthwhile investment during the cost-of-living crisis, Ms Springall highlighted the importance of savers realizing what type of product they are investing in.
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Ms Springall said: “As savers consider alternatives to NS&I’s premium bonds, there are price draws with Nationwide and Halifax (Halifax will also have a Superdraw in June).
“But ultimately, NS&I is a government-backed brand and could be a trusted safe haven to invest their money in.
“As an alternative, the Yorkshire Building Society is offering a ‘Make Me A Saver’ account, a fixed term regular savings account that pays one per cent floating, savers can deposit up to £150 a month and ten winners are chosen each month wins £1,500 (must save at least £50 a month).”
Those interested in a Premium Bonds savings account can apply through the NS&I website.