With more than 22 million of us holding them, they’re one of the UK’s favourite savings account. But how well do you really know Premium Bonds? Whether you’re a Premium Bonds newbie or established superfan, our resident ninja is here to make you wise in their ways.
Level 1: Essential
The info you need to succeed
What are Premium Bonds?
They’ve been encouraging the UK to save since first going on sale in 1956 – in fact, £5 million of Bonds sold on their first day (a huge amount at the time)!
Instead of earning interest, every £1 saved in Premium Bonds gives you the chance to win tax-free prizes in a monthly prize draw. The first ever draw took place on 1 June 1957.
The more you save (up to the maximum of £50,000), the more chances of winning you have. Prizes range from £25 to £1 million.
You can buy Premium Bonds from £25 and, for many of us, it’s a more exciting kind of saving. You can look forward to finding out if you’ve won – and possibly enjoy the thrill of winning itself!
What does the prize fund rate mean?
The prize fund rate is the proportion of the total amount invested in Premium Bonds that’s paid out in prizes. It’s the prize fund rate which determines the amount of money going into the total prize pot, from which winning Bond numbers are drawn each month.
Of course, with Premium Bonds, luck will determine precisely what return you might get. It’s also worth remembering inflation can reduce the value of your money over time.
See our Premium Bonds prize fund rate
How many prizes are there (and how does the prize draw work)?
We’re going to need a bigger calculator! Millions of prizes are won each month and split into three value bands – higher, medium and lower. We allocate prizes to each band as a percentage share of the monthly prize fund.
Those of us with Premium Bonds tend to get super-excited about the prize draw, so it’s worth knowing about key dates. Those lucky enough to win the £1 million jackpot find out first, with a visit from Agent Million. The winning bonds are released on the first working day of the month, with all prizes available to check the following day, via the prize checker app.
Still following? You’re ready to level up!
Level 2: Expert
Your brain knows no bounds
Who’s this ERNIE then?
Electric Random Number Indicator Equipment – lovingly referred to as ERNIE – is our random-number generator and the power behind Premium Bonds. Since the first prize draw in 1957, ERNIE has generated the numbers for hundreds of millions of prizes.
To keep up with the times, ERNIE’s seen a few upgrades over the years. The original ERNIE was designed by a team who’d worked at Bletchley Park. Despite being a technological marvel for its time, it was the size of a van and took several days to produce the numbers for each prize draw. Our current ERNIE 5 boasts a quantum chip the size of a 5p piece – and takes 20 minutes to complete a job that once took days!
What’s the prize checker app (and do I need it)?
If you love the Premium Bonds draw, you’ll love the Prize Checker app, too. You can use it to find out if you’ve won with just a few taps. Your holder's number is saved in the app.
So go on, get the app, hit the big reveal button and enjoy the thrill of discovering whether it’s a very, very good morning!
Why do Premium Bonds make a great present for kids?
You can gift Premium Bonds to any child aged 16 or under, making them a particularly popular choice with grandparents, godparents, aunties and uncles etc.
Available to buy from £25, they’re a great way to help save for a child’s future while also providing the fun of a monthly prize draw. Once set up, it’s easy to keep adding to them for birthdays, Christmases and other special occasions. And because a prize draw is way more exciting to a child than a normal savings account, Premium Bonds can also provide a great opportunity to teach children how money and savings work.
Give the gift of Premium Bonds
You’re almost a ninja. It’s time to level up!
Level 3: Ninja
The knowledge only a few pursue
Who’s the mysterious Agent Million?
Some question if they are even real, but those that know, know. Agent Million is the mystery messenger who personally delivers the news every Premium Bonds fan dreams of hearing.
Yes, it’s 100% true: Agent Million (who’ll be carrying ID) will pay you a surprise in-person visit if you become one of the lucky jackpot winners. This is another good reason to always keep your personal details up to date – imagine them travelling all that way only to knock on the door of your old address!
Agent Million has so far managed to reach every jackpot winner since the £1 million prize was introduced in 1994. Though a little detective work has been needed on occasion...
Are newer Premium Bonds somehow luckier?
It’s become a popular myth, but no – new Premium Bonds are not luckier. The reason it may appear that way is that of all the Bonds currently held, more than 90% have been bought since 2000. They may appear luckier because there are simply more of them!
The thing to remember is that each Bond number is worth £1 and has the same chance as any other to win a prize in each draw. It makes no difference when or where your Premium Bonds were bought.
How do I get a prize if I win?
The easiest way to get your prize(s) is by having it paid straight to your bank account. In fact, 9 in 10 prizes are already paid this way or are reinvested into more Bonds.
It’s quick and easy, with the alternative option being a paper warrant (like a cheque). If you choose this way to receive a prize you’ll need to wait for it to be printed, packed and posted – and then have the hassle of going to the bank to pay it in. Getting a prize paid directly to your bank account is safer, with zero chance of your prize going to an old or wrong address.
If you’re lucky enough to win a prize of £5,000 or more though, we may send you a claim form which you’ll need to complete and send back to us before we can pay your prize to you.
If you’d like to switch to having your prizes paid directly to your bank, we’ve made it simple.
What is reinvesting anyway?
If you’ve already got Premium Bonds, you may have been asked if you want to reinvest any winnings. But what exactly does this mean?
In short, instead of receiving prize money, you automatically get new Premium Bonds for the same cash value. Many choose to reinvest their prizes as it helps them build their savings while boosting their chances of winning again.
Another bonus of reinvesting is that Bond numbers bought this way are immediately eligible to win prizes in the next draw. Normally, new Bonds must wait a full calendar month before being eligible to win prizes.
Congratulations! The Premium Bonds Ninja salutes you!
Wisdom is a journey, not a destination. Check out more blog articles to continue your Premium Bonds quest.
