Everything you've ever wanted to know about NS&I's Premium Bonds, from how they actually work, your odds of winning, finding unclaimed prizes and how to cash them in.
How do Premium Bonds work?
Rather than paying out interest like a normal savings account, with Premium Bonds the interest is bundled together and a lucky section of bondholders win prizes each month.
So while your initial stake is never at risk, if you don't win anything your money will slowly lose value as inflation erodes its value.
Every bond number has a “separate and equal chance each month of winning a prize” according to NS&I, although your odds of winning something improves with the number of Premium Bonds you own.
How do you buy Premium Bonds?
If you want to buy tax-free Premium Bonds, you have to pay at least £25 with NS&I offering a unique bond number for every £1 you pay.
Once you’ve bought a Premium Bond, you’ll be eligible for the draw one full calendar month after you buy them.
So, if you buy them in August, you’ll be in every draw from October.
It’s easy to buy Premium Bonds for yourself, as you can buy online, over the phone or by post with a cheque.
If you want to buy these bonds as a gift, you can apply online or by post, but only the nominated parent or guardian will be able to manage and cash in the bonds.
Parents and legal guardians also have the option to apply over the phone.
You can learn more about how to buy Premium Bonds in this handy guide.
How are the winners selected?
NS&I uses Electronic Random Number Indicator Equipment (ERNIE) to generate numbers at random, which are then matched against eligible bond numbers to find the lucky winners.
There’s even an independent check by the Government’s Actuary Department to rule out any intervention every month.
If the draw is believed to be completely random, the department issues a certificate and the winners are announced.
Unclaimed prizes: be sure to keep your records up to date
There is more than £60 million worth of unclaimed prizes sitting at NS&I headquarters, with some individual prizes worth up to £100,000.
NS&I says the most common reason prizes go unclaimed is that people move home and forget to update their records. So make sure your personal details are up to date on the NS&I site to avoid potentially missing out on a windfall.
How do I sell Premium Bonds?
You can cash in all or some of your bonds at any time by calling NS&I or logging onto the website.
Alternatively, you can print, fill out and send a cashing in form, which should include any bond certificates to be cashed in (if you have them).
How quickly you get your money back from your NS&I account depends on the amount you want to withdraw, and the method used, but it will usually take at least a few days.
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