In a revelation that's set to shake up the savings landscape, consumer champion Martin Lewis has delivered a sobering assessment of Premium Bonds, declaring they're simply "not worth it" for the vast majority of Britons.
The Hard Truth About Premium Bonds
The Money Saving Expert founder pulled no punches in his analysis, explaining that while Premium Bonds might capture the public's imagination with their monthly million-pound prize dreams, the mathematical reality paints a very different picture for most savers.
"The problem with Premium Bonds is that they're essentially a lottery where you get your stake back," Lewis explained. "For every person who wins big, thousands more receive minimal returns that fall well below what they could achieve elsewhere."
Why The Odds Don't Stack Up
Lewis highlighted several key issues that make Premium Bonds an underwhelming choice for most:
- The current "prize fund rate" of 4.40% sounds competitive, but this is an average that's heavily skewed by large winners
- Over 60% of bondholders receive returns below 3%, with many getting nothing at all
- The chance of winning the £1 million jackpot with the maximum £50,000 holding is approximately 1 in 60 billion each month
- Most savers would be better served by fixed-rate savings accounts or cash ISAs offering guaranteed returns
Who Should Still Consider Premium Bonds?
Despite his stark warning, Lewis acknowledged there are still some circumstances where Premium Bonds make sense:
- Higher-rate taxpayers who have used their PSA allowance
- Those who enjoy the "thrill" of potentially winning big while keeping their capital safe
- Savers who need easy access to their money and struggle with the discipline of regular savings
The Better Alternatives
For the majority of savers, Lewis recommends exploring other options that provide more predictable returns. Easy-access savings accounts currently offer rates around 5%, while fixed-term bonds can provide even higher guaranteed returns for those willing to lock their money away.
"The emotional appeal of Premium Bonds is understandable," Lewis concluded, "but when it comes to growing your savings, mathematics should trump emotion. For most people, there are simply better ways to make your money work harder."
The warning comes at a crucial time for UK savers, with many still grappling with the impact of high inflation and seeking the best ways to protect and grow their hard-earned cash.
