The findings highlight the trade-off at the heart of Premium Bonds. While the product offers the chance to win tax-free prizes and guarantees that savers will not lose their original capital, there is no interest paid on the money held. As a result, those who never win receive no financial return from their savings.
According to AJ Bell, 14.3 million people holding Premium Bonds have never won a prize, representing 62% of all account holders. The figures relate to more than 24 million people who currently hold Premium Bonds with National Savings and Investments (NS&I).
Most Non-winning Account Holders Receive No Return on Their Savings
Premium Bonds operate differently from conventional savings accounts. Instead of paying interest, every £1 bond is entered into a monthly prize draw offering tax-free prizes ranging from £25 to £1 million.
According to AJ Bell, each individual bond has odds of 22,000 to one of winning any prize in a given month. Sarah Coles, head of personal finance at the company, said the absence of guaranteed interest means savers who do not win are not earning a return, while inflation can reduce the purchasing power of their money over time.
The data shows that people who have never won a prize have held their bonds for an average of 8.1 years, with an average holding of £128.91. AJ Bell calculated that the same amount placed in a cash savings account could have increased by 17% over that period to £150.82. For someone starting with £5,000, the equivalent return would have been £5,850.
AJ Bell also compared the figures with a global tracker fund over the same period. It estimated that an initial investment of £128.91 could have risen to £338.30, while £5,000 could have grown to £13,122. Based on those calculations, savers who never won a Premium Bonds prize could have missed returns of £209.39, or £8,122 on an initial £5,000.
Ms Coles said people who have held Premium Bonds for years should consider how much they have won overall and whether their savings could be working harder elsewhere.
NS&I Says Premium Bonds Remain One of the UK’s Most Popular Savings Products
NS&I defended the product, stating that Premium Bonds provide savers with the certainty of receiving back the full amount they invest while also offering the opportunity to win tax-free prizes each month.
According to an NS&I spokesperson, Premium Bonds remain one of the country’s most popular savings products because they combine a government-backed guarantee with easy access to withdrawals and monthly prize draws. The organisation also noted that, unlike some investments, Premium Bonds do not expose customers to the risk of losing their original capital.
The latest Premium Bonds draw awarded more than six million prizes worth over £433 million. Since the first draw in June 1957, NS&I said 845 million prizes have been paid, with a combined value of £42 billion.
Every Premium Bond has an equal chance of winning in each monthly draw, although NS&I noted that people holding more bonds receive more entries, increasing their overall chances of securing a prize. While Premium Bonds continue to appeal to many savers because of the possibility of tax-free winnings, the latest figures underline that a majority of account holders have never received a payout.
