We were looking at the last ever Autumn Statement for last week's Finance Fridays and what it means for everyone. This week we are talking about Premium Bonds – are they worth investing in again or should you put your money elsewhere. With savings rates so low is it worth buying some. If you're stumped for a present for someone such as your child or grandchild could Premium Bonds be a good idea? Let's have a look at what they are.
What are Premium Bonds?
- It is a savings account run by National Savings and Investments
(NS and I) which is part of the UK Government. Unlike traditional
savings accounts no interest has ever been paid but each bond is put
into a monthly prize draw with a chance of winning a cash prize. The
money invested in Premium Bonds is used not only to fund the prizes
but also to help fund Government spending.
How much do they cost?
- The minimum amount you can invest each time is £100 (it did use to
be £50). The maximum holding you can have altogether is £50,000.
You can buy them for yourself or for your own child, grandchild or
great-grandchild. You cannot buy them for any other relatives or
friends. Instead you would need to give them the money in order for
them to buy some Premium Bonds themselves. For each £1 invested you
will be allocated 1 Bond number so a minimum £100 investment would
give you 100 separate Bond numbers that would go into the monthly
draw.
What are they worth?
- Exactly what you paid for them. A Premium Bond bought for £100 20
years ago will still be worth £100 today. However, as the investment
is government backed it is guaranteed. To cash in Premium Bonds won't
cost you anything and you can do it at any time.
Who is 'Ernie'? -
Ernie is the name that was affectionately given to the machine that
draws the winning numbers. Obviously over the years the actual
machine or now computer software has been updated four times. Ernie
was developed by one of the original Bletchley Park code breakers and
it stands for Electronic Random Number Indicator
Equipment.
What prizes can I win?
- Ernie draws the numbers on a monthly basis. Your new Premium Bonds
will be put in the draw one full calendar month after you have bought
them. Therefore any Premium Bonds bought in December would be in the
February draw. The prize fund is determined by the amount of Premium
Bonds sold so the more bonds the bigger the prize fund. Any prizes
given out are tax-free. The current odds of winning a prize is 30,000
to 1 for each £1 Bond number. Each month two £1 million prizes are
drawn along with over 2 million other prizes going down to £25.
How do I know if I've
won? - NS and I will write to you and tell you that you have won.
They could send you a cheque or you can set up your bank details so
any winnings are paid directly into it. Alternatively you can
reinvest the winnings into more Premium Bonds. If you have moved
house you will need to contact NS and I and tell them your new
details. In the meantime you can check the website
to see if you have won any prizes. There's also an app you can
download as well. NS and I have all the bond numbers from June 1957
that have won but have not been claimed. You could have an unexpected
windfall waiting for you!
Do you have any Premium
Bonds? Have you ever won any prizes?
If
you want to join in with this week's Finance Fridays then add your
link to the linky below. Any post concerning financial matters is
allowed. Full details here.
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Tuesday 13th
December 2016 to join in.
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How bizarre as hubby and I were talking about premium bonds only this week. We want to buy more and have just found out we can still do so from France.
ReplyDeleteI have a couple of premium bonds but never won on them........maybe one day
ReplyDeleteLoving your new header for the festive season and my Mum and Dad have premium bonds, not something you hear of much nowadays. Mich x
ReplyDeleteThe husbeast has some premium bonds he got as a baby. he has never won anything
ReplyDeleteI have some premium bonds but don't often win. With interest rates so low it isn't worth putting your money in a bank account really so I might try out my chances and get a few more. x
ReplyDeleteMy kids both have premium bonds and my daughter has won a couple of £25 cheques! We like that there is always that possibility....
ReplyDeleteAt one point a long time ago I had a fair bit in premium bonds but I didn't do very well and cashed them in a year later x
ReplyDeleteOh I didn't realise you could even get these any more - I really remember them from when I was a kid!
ReplyDelete